In France and Italy, it will be necessary to stop using fiscal deficits and public debt to compensate for the lack of structural reforms

France and Italy are unfortunately characterised by: A low employment rate, due in particular to the low level of labour force skills; Low productivity gains, likewise due to the low level of skills, deindustrialisation, and insufficient modernisation of corporate capital, which result in low real wage growth; A low retirement age. The low employment rate results in income inequality (before redistributive policies), low real wage growth leads to growing demand from the population for a boost in purchasing power, while the low retirement age makes it difficult to balance the public pension systems. Government policies have therefore consisted in trying to fix these problems by implementing substantial redistributive policies, large government transfer payments to households, and the acceptance of high government spending on pensions. All in all, in France and Italy there is therefore a high level of welfare spending, which accounts for the large fiscal deficits and high public debt ratios, and which is directly due to the fact that the structural problems (low skills, deindustrialisation, little corporate modernisation, low retirement age) have not been fixed. This policy seems to be continuing at present.