Anglo-French Leftist Governments and Their Economies
After years of Tory rule, the Labour Party received a large electoral mandate in the recent UK elections. Keir Starmer and his leftist coalition are now tasked with revamping the British economy. Yet, with his reluctance to reenter his nation into the European Union, the world waits to see where Great Britain’s economy is heading. Across the English Channel, the Left also had an impressive outing in the general elections. With the possibility of the far-right coalition taking control of France for the first time since the Vichy regime, the middle and left have banded together and kept the far-right from winning the parliamentary elections. How are these two leftist governments to depart from the economic policies of the former governments? For Britain, it's embracing the long road. For France, it’s embracing a form of progressivism not seen since the 80s.
Keir Starmer, the UK’s Prime Minister, claims that the path to national renewal is “no quick fix” (Murray & Hett, 2024). The Tory Party came into power in 2020 with a massive national debt already. Still, former Prime Minister Liz Truss’s decision to cut taxes has resulted in the national debt reaching 89% of the country’s GDP (These Charts Show How Britain's Tory Party Lost Its Way, 2024). Although Rishi Sunak slashed inflation from a peak of 11.1% to 2.2% and oversaw slight economic growth, the British electorate still gave Labour a resounding majority (Yates, 2024). The Labour Government plans to correct the economy by improving the nation’s infrastructure, transferring some powers to local officials, nationalizing the railroads, and increasing labor rights (Murray & Hett, 2024). Starmer has already seen inflation decrease to 1.70% since taking over this summer (Yates, 2024). The government also pledges to renegotiate the EU trade deal from the Boris Johnson years by removing most trade barriers like border checks (What Is Labour’s Trade Policy? | TaxScape | Deloitte | Deloitte, 2024). Johnson’s post-Brexit trade deal does not discuss financial services (England’s most lucrative economic sector), but instead fishing rights, border checks of British exports, and study abroad for students (Castle, 2020). Progress may be slow, but Starmer is confident his policies can grow the British economy.
On the other hand, France will not be governed by a central left party, but by an alliance of the entire left. At the beginning of his reign in 2017, President Macron was hailed as the “Mozart of Finance”, but his tax reductions cost France €62 billion. Even the mastermind of Macron’s economic policy, Jean-Pisanny Ferry, admitted that the policy failed (Leali, 2024). After the elections where Macron’s vision was rejected, the Left has already rolled out some of the new policies it will create once it’s governing. They include traditional leftist policies like raising the minimum wage, and price ceilings, lowering the retirement age, and investing in sustainable and renewable infrastructure (Brunet, 2024). The Left will depart from the pro-business policies of Macron and introduce a corporate super-profits tax, a wealth tax, and an inheritance tax (Brunet, 2024). These policies will improve the nation’s industrial sector and allow for the dishing out of more social services. Critics, however, claim these policies will bankrupt the government and make France socialist.
As of Q2 of 2024, France was the UK’s fourth largest trading partner, making up for 6% of the UK’s total trade. From Q2 of 2023 to Q2 of 2024, the total trade between France and the UK reached a value of £104.6 billion. UK exports to France were valued at £45.4 billion, and imports were £59.2 billion (France, 2024). There is sentiment in the British government to lower that trade deficit by increasing exports to France.
I believe that the British will stimulate growth within their economy because Keir Starmer’s economic agenda reminds me of Biden’s. Biden and Starmer believe in investing in domestic industries, infrastructure, and labor except for transferring power to municipalities. The results in the US have been that employment is up 12% and the real GDP increased 3.5% in Biden’s first three years, as opposed to Trump’s 2.7% increase. Although not taken into account in the prior statistic, real GDP growth is still up in Biden’s final year. I am curious to see if the new direction France is taking will pan out. The Left wants to invest in infrastructure like the British, but we have to see if the amount of new taxes being levied will slow the economy. Overall, the two nations are now led by political parties that celebrate globalization and the incoming increase in trade will bring jobs and wealth to both them and the world.
Edited by Raghav Agarwalla
References
Brunet, R. (2024). France’s new left-wing alliance unveils ambitious economic programme – and how they’ll pay for it[Review of France’s new left-wing alliance unveils ambitious economic programme – and how they’ll pay for it]. France24. https://www.france24.com/en/france/20240621-france-s-new-left-wing-alliance-unveils-ambitious-economic-programme-%E2%80%93-and-how-they-ll-pay-for-it
Castle, S. (2020). Brexit Trade Deal Reached Between U.K. and E.U. The New York Times. https://www.nytimes.com/2020/12/24/world/europe/brexit-trade-deal-uk-eu.html
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Murray, F., & Hett, M. (2024). King's Speech: Keir Starmer pledges growth but warns of 'no quick fix'. BBC. from https://www.bbc.com/news/articles/c903d09jwk7o
These charts show how Britain's Tory party lost its way. (2024). The Economist. https://www.economist.com/graphic-detail/2024/07/02/these-charts-show-how-britains-tory-party-lost-its-way
What is Labour’s trade Policy? | TaxScape | Deloitte | Deloitte. (2024). Deloitte.com. https://taxscape.deloitte.com/article/what-is-labour-s-trade-policy-.aspx
Yates, T. (2024). Is the economy really in such bad shape? UK in a changing Europe. https://ukandeu.ac.uk/is-the-economy-really-in-such-bad-shape/
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