France should not abandon pension reforms or refrain from improving government efficiency

Public spending on pensions is 4 percentage points of GDP higher in France than in the rest of the euro zone, and 4.5 percentage points of GDP higher in France than in Germany. If labour productivity in the public sector were the same in France as in the other euro-zone countries, the general government payroll would be 1.2 percentage point of GDP lower in France; if it was the same in France as in Germany, the general government payroll would be 3.6 percentage points of GDP lower in France. Refraining from carrying out pension reforms and from restoring government efficiency therefore leads to a 5.2 percentage points of GDP higher tax burden in France than in the rest of the euro zone, and 8.1 percentage points of GDP higher in France than in Germany. A failure to carry out these reforms will therefore lead to an irreversible disadvantage for France as regards corporate investment choices, as this gap between the tax burdens is almost entirely reflected in the gaps between the tax burden on companies in France and either the other euro-zone countries or Germany .