Report
When can purchasing power be stimulated?
The governments in France and Italy want to rapidly stimulate household purchasing power ( by increas ing welfare benefits or cutting taxes ). But these two countries are characterised by insufficient supply of goods and services: low productivity gains and potential growth, deindustrialisation. Given that there are supply constraints, stimulating household s’ purchasing power would have very little impact on production ; its main consequence would be a deterioration in the two countries’ foreign trade. So the right sequence is clear: The supply of goods and services should first be restored ( by modernis ing capital, improving labour force skills and reducing labour cost s ); Purchasing power should be stimulated only after productivity and the supply of goods have been restored ,.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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