France, Italy: If someone wants to be certain to worsen the economic situation, what should they do?
Given the structural problems in France and Italy, if someone wants to be certain to worsen these two countries’ economic situation, they should : Increase wages before productivity and skills have been restored, which would lead to greater market share losses and declining investment; Increase low-skilled labour costs, which would drive up low-skilled unemployment; Push the fiscal deficit up to the level that triggers a rise in long-term interest rates; Increase taxes on capital up to the level that discourages investment in the country’s companies.