Mathieu Vaglio S00304012
International economic issues The effect of the credit crunch on UK and France economic policies
France and The UK have a long story of rivalry since the 15th century and the 100 years war. Since then, these two countries have evolved following different pathways that allowed them to become part of the world’s richest and powerful countries. The purpose of this paper is to analyse to what extend these two economic models differentiate from each other. Furthermore it will be interesting to analyse how the influence of different politico-economic models impacted the strategic decisions that were made to stand again after a major collapsing of the world’s economy due to the 2008 credit crunch. The differentiation of policies and decision making can be influenced by both economic background but also recent boom and bust of economy and its models.
France, on one hand, is the fifth largest economy in the world, with a GDP of $2.865 trillions. Government policies, influenced by high interventionism, want to promote domestic growth in a stable fiscal and monetary environment. This interventionism is the propensity of the state to be highly present and influent on the economical market. It is a fact that the French government had, historically, participated in the development of the economy by directly investing in key industries such as banking, energy production, automobile, transportation or telecommunications (The Economist, Special Report). Even after a major wave of privatization and decentralization in an attempt to reform the French economy for the past 15 years, the government spending is still the highest in the G7 with 52.7% of GDP (US Department of State, diplomacy in action). On this basis we can already identify some hints that the French economic policies have been influenced by Keynes theories of economics. These imply an
important partnership to be in stored between private and public sector...