Report
After the coronavirus crisis, what is rational for an individual company becomes collectively dangerous
After the coronavirus crisis, companies (we look at the cases of the euro zone and France) will be much more indebted, as they will have to offset some of the fall in their revenues during the crisis by borrowing. The individually rational reaction of indebted companies will be to freeze wages and hiring and reduce investment budgets. But this rational reaction by individual companies is collectively disastrous, as it will keep activity weak once the health crisis is over if wages and employment are stagnant and investment falls (after the 2008-2009 crisis in the euro zone and France, employment was stagnant and investment was weak, but there was no wage freeze ). Governments will therefore have to help companies invest and hire, with investment aid (tax cuts, accelerated depreciation) and measures to boost employment (reduction in social contributions for new employment contracts for example).
Provider
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
Other Reports from Natixis
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.