The need for a large increase in corporate equity

We will look at the cases of the euro zone and France. We believe that a proper economic recovery after the COVID crisis will require a large increase in companies’ equity, for several reasons: The fall in earnings in 2020 has reduced equity at the same time as debt has increased; Capital is going to be destroyed (stranded assets) due to long-lasting problems for some economic sectors and the energy transition; Heightened uncertainty will lead to less risk-taking (investment, innovation, hiring) among companies if they do not have more equity. This calls for an innovative solution to channel a larger share of savings into corporate equity.