France: The zero-sum game trap

Productivity gains are very low in France and, accordingly, the income that can be distributed is hardly increasing. Pressure on the labour market is leading to markedly gre a ter increases in real wage s than in productivity. Moreover , the economic policy conducted will be positive for households in 2020 : tax cut s , increased welfare transfer payments . As the income to distribute between different economic agents is hardly increasing, we are looking at a zero-sum game (if one group of economic agents gains, another group loses). Since income distribution and economic policy will be positive for employees (households) in 2020, this zero-sum game will be markedly negative for companies (this is not the case in 2019 thanks to an exceptional corporate tax cut this year). The choice that has been made in France is therefore to disadvantage companies to the benefit of households (which will take the form of different tax increases or reductions in tax benefits for companies), which is not necessarily a good idea in a country where supply side problems are significant.