What economic policy questions and recommendations for France today?

We believe that for France today, but also for other European countries, the following economic policy questions and resultant recommendations apply : It is likely that the economy will almost fully normalise after the public health crisis. Households and struggling companies must therefore continue to receive support. The economic outlook hinges on how the forced savings are used: if they are spent, there will be a consumption boom; if they are invested in financial and real estate assets, there will be asset price bubbles. In the first case, the economic stimulus (fiscal, monetary) could be reduced quite rapidly; in the second, there will be a massive financial instability problem but no drastic growth recovery. This will depend on the degree of optimism, the pace of the decline in unemployment and the degree to which corporate balance sheets have deteriorated. Economic policies can try to channel savings into efficient investments and develop macroprudential policies. A position must be taken on the cause of the low long-term interest rates (expansionary monetary policy or excess global savings). In the event excess savings play an important role, long-term interest rates will remain low and public debt could still be used to finance efficient spending. The highly expansionary monetary policy will give rise to asset price bubbles and increased wealth inequality. For economic and political reasons, this inequality will have to be combated, but this must be done in a way that does not increase the cost of capital. The COVID crisis should not obscure the fact that France’s problems are due to structural shortcomings that existed long before it: shortcomings in the education system, low labour force skills, inefficient government, weak corporate modernisation.