Ed Balls's plan B has lost all credibility as the UK is doing better than expected – and France's alternative to austerity doesn't work
Business confidence is falling. Unemployment has risen to 10.9%, a 16-year high. Only months after escaping one recession, the nation is on the brink of another. Time to adopt Labour's plan B? No, because this is France – plan B is already in place, and the bad economic news is its grisly fruit.
At one time, it seemed as if the British left would never stop talking about a grand economic alternative to austerity. There was even a "march for the alternative"– though none of its proponents were very specific about exactly how the alternative would work. The most you could get out of them was this: austerity would be stopped; the rich would be made to pay far higher taxes; the deficit could look after itself, or else it would be magically paid off by a plan-B boom.
Those halcyon days are over. Ed Balls, the personification of plan B-ism, has stopped shouting the words "too far, too fast". He's even ditched his flatlining gesture. The British economy isn't fully recovered, and there are plenty of problems – not least the rising cost of living, and the major task of eliminating the rest of the deficit. But the idea that trying to live within our means would cause downturn and disaster has been demolished by reality. Today, the Office for National Statistics (ONS) announced that the number of people out of work fell by 99,000 in the three months to October. The unemployment rate now stands at 7.4% of the working-age population, down from 7.6% in the three months to September – a four-and-a-half-year low.
Plan B has lost all plausibility, because the dire forecasts of its supporters have not come true. That isn't to say we should forget its existence. "The alternative" isn't just a relic of the British political past – it's a fact of life in modern-day France, and we should study it in detail.
The Hollande government has raised taxes by €60bn in two years, loading more costs onto business in particular. Tax on high earners is being hiked to 75% – so they are fleeing to London, Monaco or, in one eccentric case, Russia. At the same time, the power of trade unions and the president's unwillingness to pursue regulatory reform means France's red tape mountain is largely intact. The result is the current fiscal and economic crisis.
The economic resurgence Hollande, Balls and others promised has not come to pass. The public finances continue to be founded on unaffordable debt. So the French government is now trying to move to plan A. The early draft of the 2014 budget proposes €15bn of spending cuts and €3bn in tax rises – a ratio strikingly similar to Osborne's 4:1 formula that the March for the Alternative once denounced.
There is no glee to take, even for deficit hawks like myself, in the disastrous French experiment with plan B. It has inflicted the huge human cost of yet another downturn, yet more unemployment, and yet more debt on a country which could instead be on the road to recovery.
But there is a lesson to learn. When someone promises that you can get out of a serious debt problem by borrowing more, they are lying or they have been lied to.
We in the UK have not had it easy, but we were fortunate that in 2010 the electorate saw through the false promises of those who pretended there was no need to change the way we run the public finances. The French have been less fortunate, and are only now starting to come to the right conclusion the hard way.
When people next march through London preaching an "alternative" to hard decisions and balancing the books, we need only look at the experience of France to realise how wrong they are.