Another One Bites the Dust

France’s fifth Prime Minister in two years resigned yesterday morning, making the UK appear a relative haven of stability. Mrs Reeves is wrestling with some frightening numbers prior to another tax raising budget on November 26th, but she must be relieved that she isn’t in charge of the French economy.

In summary: 

1. The French state forms the largest part of the economy with the highest percentage of total spending in the world at 57%.The UK’s is 44%.
2. French debt has edged ahead of the UK. Including off balance sheet liabilities such as pensions, French debt exceeds 400% of GDP.
3. France has not run a budget surplus since 1980.
4. The French have the longest retirements in the world, averaging in excess of 25 years.
5. France is the only place in the world where the average pensioner earns more than the average worker. The annual cost exceeds 350 billion euros.
6. France spends 14% of GDP on pensions vs 8% in the UK, and as the population ages, this cost is crowding out all other areas of public spending.
7. France’s retirement age is 64.
8. GDP per capita at $44,000 compares with the US at $82,000 and the UK at $49,000.
9. Average French tax rates are 46%. The UK figure is 35%.
10. In 2023, average French real wages fell 3.6% while state funded pensions rose 5.3%.
11. France’s population is ageing faster than the European average. In 1981 there were 5 million pensioners. Today there are 17 million. 
12. French bond yields are now higher than in Spain, Greece and Italy.

Absent a decade of explosive economic growth, France’s trajectory is not sustainable, and continuing political instability prevents any meaningful cuts in government expenditure. Being part of the Eurozone will be a mixed blessing. The ECB’s promise to do ‘whatever it takes’ to protect and preserve the Euro was an expensive undertaking when Greece faced similar issues. France, as the second largest economy in the EU, will be totally a different proposition. 

The price of an ECB rescue will include the loss of control over government spending, and given the inevitable reaction of the French population to the end of their ‘Social Contract’, a more realistic option could be a return to the French currency. France must have noticed the improvement in the UK’s competitiveness and affordability of its assets to foreign buyers as the Pound fell following the financial crisis in 2008. The alternative could be catastrophic.

Jo Welman had a career in the City spanning 45 years and worked in a wide variety of financial sectors. After graduating from Exeter University in 1979 with a degree in economics, Jo spent ten years at Baring Asset Management where he managed a range of UK and US pension funds and unit trusts, investing across multiple sectors including bonds, international equities, commercial and residential property and private equity.

In 1989 Jo became Managing Director of merchant bank Rea Brothers’ institutional and private wealth investment management division. Over the following decade Jo launched a series of specialist investment trusts and funds in a variety of industry and property sectors, before forming a joint venture with reinsurance broker Benfields (now Aon Benfield) and raising one of the first limited liability corporate capital vehicles for the Lloyds insurance market in 1993. As part of his long-standing involvement in the insurance industry, Jo co-founded the Benfield Re-Insurance Investment Trust plc (Brit) in 1995. Following the sale of Rea to Close Brothers in 1999 Jo became Chairman of Brit Insurance Holdings Plc and in 2001, in partnership with Brit and Benfields, he co- founded specialist asset management firm, EPIC Investment Partners (EPIC).

Jo continues to chair an insurance company’s asset allocation and capital management process and provides corporate finance and investment advice to entrepreneurs and private investors. He sits on the board as a non- executive director of ARK Syndicate Underwriting and was appointed Chairman of the Walker Crips Group, the publicly listed fund manager, in April 2025.

“Feet up by the pool”

Jo does not receive any remuneration for his EPIC commentary. Instead, EPIC is pleased to promote the latest edition of his book “Feet up by the pool”.

Profits from sales of the book go to The Money Charity, a charity that shares Jo’s objective to help fill in some of the worrying gaps in the school curriculum. These omissions leave many young adults lacking in the financial awareness that they need to survive in a world where they will rely on their own savings if they are ever to stop working. Even if they earn the right to a full State Pension, today this amount hardly covers council tax and utility bills, and so they need to save and build up a sum of capital amounting to around twenty times their desired retirement income. A frightening number.

As Jo eloquently says, “If we can do our bit to raise awareness of the impending UK saving and pensions crisis, the exercise will have been worthwhile.”