The euro-zone economy will be weak in 2022 due to consumption, and also in 2023 due to investment and perhaps fiscal policies

In 2022, the euro-zone economy will be weakened by the decline in consumption, which is due to the decline in household purchasing power, despite public aid ; companies are protected by the under-indexation of wages to prices, which preserves their earnings. In 2023, the euro-zone economy will remain weak, but for other reasons. First, governments will have to start reducing fiscal deficits, thereby protecting households less from rising commodity prices; second, wage earners will get a catch-up in their purchasing power, leading to greater wage increases that will weaken corporate earnings and investment. We will therefore go from a weak euro-zone economy due to households to a weak euro-zone economy due to governments and companies. But the euro-zone economy therefore faces two years of weakness, the second in a configuration (declining earnings) that will be negative for equity markets.