What happens when there are no longer any productivity gains? The example of Italy

Italy’s key problem is the stagnation of labour productivity for more than 20 years. We will therefore look at the Italian situation to understand the consequences of a stagnation of productivity: A stagnation of real wage s (the purchasing power of the per capita wage) or, if it increases, a decline in profitability and competitiveness; Weak corporate investment due to weak household demand and weak profitability; the weakness of investment reinforces the weakness of productivity and leads to weak production capacity; Market share losses due to insufficient modernisation of corporate capital , the shortfall in production capacity and the decline in cost competitiveness; Low long-term growth; A stagnation of tax revenues (in real terms, in volume terms), which requires a stagnation of public spending, and, if current public spending increases, a decline in public investment, which also reinforces the weakness of productivity. So the trap Italy is caught in is terrible, and it is not by stimulating demand that the Italian government will get the country out of this trap.