However, economic growth requires more good intentions.
The Queen's speech was remarkable for its lack of vision and unwillingness to change direction. There were one or two minor suggestions:
- Making it easier to hire and fire workers - could help reduce labour market inflexibility
- Green investment bank
- Splitting banks into retail and investment branches.
It is the same in Europe, there has been talk of a 'growth pact' but to the ECB that means a few free market supply side policies - these are actually needed, but is only small part of the equation.
But, Will Socialist France help the Eurozone?
A big issue is whether austerity is self-defeating i.e. can it be that cutting government spending actually increases level of debt to GDP? In the UK austerity has not been self-defeating in that regard. Spending cuts and tax increases have contributed to a gradual reduction in the deficit. However, I believe the long term deficit could be reduced to manegable levels with much less immediate pain. There was no need to push the economy back into a double dip recession.
However, in some European countries, there is evidence that the depth of the recession means that spending cuts are actually self-defeating. Is austerity self-defeating?
What could the government have done to tackle Youth unemployment?
Why does France have a worse Credit Rating than the UK?When France has a smaller budget deficit...
Source: OECD (2013 forecast)
What Determines Credit rating for a country?
See also: France National debt