France: Stimulus plan or structural reforms?

In France, a “normal” stimulus consisting in additional public investment, income transfers to households and tax cuts for households risks being ineffective. This is because France is beset by a serious supply-side problem: labour force skills are weak, labour costs are high, the corporate tax burden is high and companies are highly indebted. As long as this supply-side problem is present, a “normal” stimulus will lead above all to imports and to little investment or reshoring, due to the relative unattractiveness of France for investment and its high propensity to import. Moreover, it would be pointless to boost the incomes of households as a whole, as they have accumulated massive forced savings. So what France needs is not a “normal” stimulus but a plan of structural reforms, entailing for example: An improvement in skills ; An improvement in attractiveness and investment (corporate tax cut financed by an improvement in the efficiency of the state and pension reform); The conversion of corporate debt into equity .