Will the French Passion for Strikes Cross the Channel?

The UK is bracing itself for the big squeeze. On Wednesday we will find out just where the axe will fall as the government tries to get its fiscal house in order.

The Palace of Westminster, home of the UK Parliament in London.
Sharon Lorimer
The Palace of Westminster, home of the UK Parliament in London.

The ‘Comprehensive Spending Review’ aims to take £83 billion ($130.4 billion) out of government spending over the next four years.

Economists and governments on either side of the Atlantic may be divided on the need for fiscal restraint, but all the major political parties in the UK concede that action is needed. Even the Labour party, which lost power in May’s election, advocates cuts. They just disagree on the scale and speed.

Comparing the UK to other developed nations tells a typically worrying story of an over-indebted state. The UK’s budget deficit was 12.3 percent of gross domestic product in 2009, compared to 3.3 percent in Germany, 7.5 percent in France, 13.6 percent in Greece and 14.3 percent in Ireland, according to Eurostat.

The latest figures from the US show a deficit of 8.9 percent in 2010, down from 10 percent in 2009 (CBO figures). Given that the European Union sets a 3 percent goal for budget deficits, all of Europe’s governments should try harder.

The private sector has already been through one round of recession-induced cut-backs and now it’s the public sector’s turn. The quasi-governmental Office for Budget Responsibility suggests the public sector will shed about half a million jobs by 2014/15 and analysis by business advisory firm PwC shows the knock-on effect in the private sector may be another half a million lost positions.

But the unknowns are enormous and cloud the analysis. For example, if the deficit cutting allows interest rates to stay lower for longer, what positive impact will this have on job creation?

The private sector typically likes the idea of a smaller state and 35 business leaders put pen to paper with a letter of support for the Chancellor this week, published in The Telegraph newspaper. Optimists look for the private sector to step in where the state retreats.

Images of strike action in France never feel too relevant in a country that went through significant labor market reform in the 1980s.

But with the UK public sector about to see the cuts in black and white, is there a chance that Gallic passions for protest may spread across the Channel? It could be a very long winter.