France: A seldom-discussed redistributive mechanism

In France, the fall in interest rates has led to a sharp fall in interest paid by companies since 2009. Th ese lower interest rates have boosted companies’ profitability and capacity to invest, even though real wages have risen faster than productivity. They ha ve therefore made it possible to boost wages without worsening companies’ financial situation. This is clearly a large-scale redistributive mechanism, going from lending (“rich”) households, which receive much lower returns on their savings, to wage earners, who have obtained wage increases without eroding corporate profitability.