A tale of two cities – is the future revolution or evolution?

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair,” so opens ‘A Tale of Two Cities’, Dickens’ novel published in 1859 and set in the years leading up to and during the French Revolution.

A story for today

In comparing Paris and its environs with London and its countryside, the novel tells the story of the gap between rich and poor; the sense of an elite confident that things would remain unchanged and that their control was absolute. They are themes that resonate with the populist movements we see today and the drive to ensure that the so-called ‘left-behinders’ are not left behind.

In Dickens’ tale, the discontent manifests in the Storming of the Bastille and the French Revolution. Meanwhile, the UK sailed on and change was evolutionary rather than radical.

Today, however, it is the UK pursuing radical change through its vote to leave the world’s largest trading bloc. In President Macron, France has chosen to remain in the EU and the country appears the more stable of the two.

Britain and France – how different are they?

So let’s pursue a Dickensian comparison of the two nations. The French President has boasted recently that France is the 5th largest economy in the world. The claim echoes that made by Theresa May during the General Election! So who is right? If we base the comparison on the exchange rate, the UK is very slightly ahead – although it would take just a 1% fall in the value of the pound against the dollar for the reverse to be true.

Instead, if we consider the more common comparison of Purchasing Power Parity, both Macron and May are wrong. In actual fact, Brazil, Russia and Indonesia push Britain and France down to 9th and 10th position respectively. It is perhaps this challenge they should be focused upon rather than playing one upmanship with one another.

Similarities disguise key differences

Looking at the British and French economies more generally, both share a similar structure. Around 80% of their economies are service-driven. Their GDP per capita of population is also similar, but if we look beneath that, a very different story emerges.

In terms of living standards, France is ahead of the UK. Gross disposable income in France is around $2,500 higher than in the UK, an increase that’s entirely down to higher productivity.  Employment though is lower. France’s employment rate is 64%; the UK average employment rate is 74%. Similarly, the unemployment rate in France is 9.5% compared to just 4.4% in the UK.

What these figures show us is that it isn’t just employment that drives growth, but productivity. In the end, it’s productivity that makes the key difference and drives living standards.

France and the UK share similarities but also significant differences. It remains to be seen how the story of the two cities will end this time around, as France return to a more stable political climate and economic growth potential, and the UK endures a rising tide of popular discontent and economic uncertainty. Heads may indeed roll at the top, but this time only political careers will be ended.