The MT Diary: My life on the Anglo-French see-saw; bad blood, new blood at the FT; Moreno's choice

If things go on like this, we'll have to start feeling sorry for the French. Some of us will find that hard, but if it has to be done...

by Howard Davies, the director of the London School of Economics
Last Updated: 31 Aug 2010

Just over 30 years ago, Her Majesty sent me to Paris as a cub diplomat.

I was supposed to run the Ambassador's office, though my main role was to organise gastro-tours for junior ministers and minor royals. I couldn't help noticing that the French were doing rather well, and looked down their elegant noses at we 'angliches' struggling with strikes and slow growth.

Paris seemed far more cosmopolitan and exciting than London, French GDP per head was 15% or so above ours, and I recall one gruesome day when my tax-free entertainment allowance was converted at a mere Ffr7.80 to the pound, the equivalent of EUR1.15 to the pound today. No second Calvados after lunch for me that month.

How things have changed. In our Paris embassy the other day, I presented a comparison of France and the UK, culled from a range of LSE research papers. The headline was that the relative wealth position has turned round, with the UK now 10% or so per head above France.

The French who were present took it on le menton, perhaps mollified by the Ambassador's free-flowing Pol Roger. They are aware that the post-war economic miracle ended in the late '70s. Most seem to accept that their stubbornly high unemployment rate - more than twice ours at close to 10% - argues strongly for labour market reform on the Blatcher model.

No-one even took the opportunity to point out that the change in relativities seriously undermines the case for our EU budget rebate, agreed at a low point in our fortunes a quarter-century ago.

But other aspects of the comparison may cause us on this side of the channel to reflect a little on whether all is really for the best in the best of all possible worlds.

Income inequality has risen sharply in the UK in the past two decades, while French society in that respect has become more equal. The inhabitants of the banlieues who riot and burn cars have barely benefited from the change because youth unemployment is so high, but that is what the figures show.

More significantly, if we look at productivity per hour the picture changes dramatically. French manufacturing firms produce about 10% more per labour hour than we do. They do that whether they are located in France or in Britain. In other words, we cannot blame the feckless British worker for this shortfall. Nor is it explained by different investment levels: it's down to the quality of management. One consequence can be seen in a very different balance of payments performance. French exporters still do well in global markets.

Back home, the loudest sound has been of doors being slammed behind departing eminences. David Blunkett, having popped back into government, popped out again. George Davies quit M&S but rejoined - though for how long? There'll be another chairman at Baker Street any minute now.

And, of course, Andrew Gowers finally left 'The Pink 'Un', after months of ugly rumours and harrumphing around boardroom tables the length and breadth of WC2. He was not a popular fellow among our industrial captains.

Many think FT journalists of late have lacked 'respect', man, and spend too much time studying the details of the remuneration committee report.

I'm sure the owners were more concerned by flagging sales: newspaper editors are not in a popularity contest. That was why Gowers had to go.

But changing the editor at the FT may prove to be the easy bit. Devising a strategy to reverse its readership decline will take a little longer.

Robert Thomson at The Times (who should have been given the FT job instead of Gowers) has expanded his business coverage, which has become both sharper and deeper under my co-columnist Patience Wheatcroft. So Thomson has been eating Gowers' lunch for the past couple of years.

Lionel Barber, now in the FT hot seat, will have his own ideas. But surely he should begin by abandoning the vain attempt to be a full-service paper (the sports section is embarrassing) and spend the money on some new columnists.

Martin Wolf and Philip Stephens remain must-reads, but some newer imports have been poor. The worst, Amity Shlaes, has already been impaled on that great spike in the sky reserved for redundant pundits. The FT should also swallow its pride and buy Robert Peston back from the Sunday Telegraph.

He's another person who should never have been allowed to leave.

Then there's the bigger question: should the FT remain part of the Pearson Group, or could another owner make more of what ought, after all, to be a terrific business?

I suspect the new chairman, Glen Moreno, is thinking hard about that just now.

But suitable owners may be hard to find. Dow Jones could hardly add the FT to the WSJ. News International? Oh dear. The Barclay Brothers? Maybe not. Richard Desmond? What would Lucy Kellaway make of that? Would she agree to a topless photo? My bet is on Macquarie Bank, especially if it digests the London Stock Exchange. The two halves of the Footsie index could then be united at last.

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