The Financial Times has an interesting piece about Canada’s cutting spree in the 1990s. Their approach, under finance minister Paul Martin, was to review all spending rather than make across-the-broad cuts, the route chosen by England. Although reviewing all programs is very painful and divisive, it sends out the better message to the debt markets – in particular, that the cuts will be forced through, rational, fair, and sustainable. Here is how it worked in Canada:

A full review of government spending better balances the five constituencies – the cabinet, parliament, the trade unions, business leaders and the markets – whose opposition can wreck the best laid fiscal plans. This was certainly the experience of the Ottawa government in the 1990s. Mr Martin’s “Program Review” was a remarkably successful way of persuading debt markets the government was serious, and the public that cuts needed to be made.
To satisfy the debt markets, the finance ministry acted as ringmaster, providing overall targets for retrenchment (3 per cent of gross domestic product over three years in Canada’s case). It gave rolling fiscal targets, which would be updated as economic and debt market conditions changed. The broad outlines were set, and Mr Martin repeatedly stressed they would be met “come hell or high water”.

The article then goes on to describe the contrasting case of England, a description that left me wondering what happened to England in the last 20 years. When I lived in France, England looked incredibly free-market to me. Now, apparently, it’s all ”looming tax increases, anti-banking sentiment, the fear of a weak coalition government, a spiraling budget deficit, and a falling pound.”

I’m not the only one to have noticed a change: EFinance Carriers has observed that the U.K. is no longer appealing to young French elites:

Adam Tobias, who runs a finance recruitment firm in London, says, “Over the last 12 months we have seen far fewer CVs from French technical staff – bankers, accountants – than usual.”
“They used to come for higher salaries and opportunities as [they] often felt stifled in France unless they had been to one of the Grand Ecoles.”

Where do the French go then? Asia.