LETTER : France is no disaster - yet

Robert Clayton
Monday 23 June 1997 23:02 BST
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Sir Mario Vargas Llosa's schadenfreude at France's current predicament ("The disaster striking France", 20 June) seems both naive and misguided.

The chief cause of unemployment in France is not socialist regulation but the attempt to conform to the Maastricht criteria for monetary union, which involve restraints on public spending and an overvalued franc. As a result, France is locked into deflationary policies during recession. There is nothing socialist about the single-currency project, which is based on vintage monetarist principles.

In Britain we were fortunate enough to be forced out of the ERM by liberal financiers such as George Soros. Financial orthodoxy predicted dire inflationary consequences, but in reality Britain gained a temporary competitive advantage from the devaluation.

Mr Vargas Llosa is naive if he accepts the conventional wisdom that the UK economy is in finer shape than that of France simply because we British are spared labour regulation. In so far as British unemployment is lower than elsewhere it is a result of cheap labour and job insecurity. Britain also creates artificial jobs by subsidising poverty pay through the benefits system. Nothing would be more likely to assist the rise of the National Front that Mr Vargas Llosa fears than the attempt to lower France to British standards of employment protection, education and health care.

ROBERT CLAYTON

Leeds

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