Higher fiscal deficit in France and Italy in 2019: This makes sense only if the reforms increase potential growth at a later stage

The economic policy measures taken in Italy and very recently in France will lead to a marked increase in the fiscal deficit in these two countries in 2019 and to a loss of fiscal solvency. This increase, which makes it possible to distribute additional income to households, is not dangerous if, in parallel, structural reforms will make it possible to increase potential growth and therefore to reduce the fiscal deficit in the future. This is probably the case in France, but not in Italy, on the contrary, since the reforms there are setbacks .