Labour productivity at the heart of the debate on French fiscal policy

Economists differ in their analysis of the causes of the decline in labour productivity in France. Some believe that these causes are mainly cyclical (hiring difficulties that have discouraged companies from making redundancies, rise in the unskilled employment rate). If this is the case, we can expect an upswing in productivity gains and growth, which will provide additional tax revenues and reduce the future fiscal deficit. Others believe that these causes are essentially structural (insufficient spending on R&D and investment in new technologies, population ageing, loss of meaning in work). If this is the case, the slowdown in growth and the fall in tax revenues will be permanent, and the fiscal deficit will remain very high in France unless corrective measures are taken . The trend in labour productivity from 2024 onwards will therefore be very important for the choice of fiscal policy to be pursued from 2025 onwards.