Report
A resurgence of wage inflation could have dramatic consequences in OECD countries
Central banks and governments of OECD countries are currently betting that wage inflation will not return. The absence of wage inflation makes it possible to maintain very low interest rates and countries' fiscal solvency despite a rise in public debt ratios (except in Germany and Sweden, where the ratio is declining ). It also maintains the solvency of private economic agents in the few countries (Canada, Australia, Sweden, France ) where their debt has continued to increase since the 2008-2009 crisis. If labour markets were to again function as in the past, the return of wage inflation and the potentially sharp knock-on rise in interest rates would cause a widespread public debt crisis in OECD countries, and a private debt crisis in some countries (Canada, Australia, Sweden, France ). The weak bargaining power of wage-earners is therefore necessary in OECD countries at present to avoid a financial crisis.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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