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The coronacrisis has revealed gaps in social welfare, the need for Europe, the role of monetary policy and, in France, the inefficiency of the state. Patrick Artus from Natixis analyzes these topics.

Key quotes

“The COVID crisis has illustrated the big differences between people who enjoy more protection (pensioners, employees on long-term contracts, civil servants) and those who enjoy less (young people, employees on short-term contracts, self-employed and craftsmen, etc.). This demonstrates the gaps in the social safety net, which must, therefore, be extended to those who do not benefit from it.” 

“There is a broad consensus that European countries should invest more in the energy transition, industries of the future, research, etc. The additional investment needs related to the energy transition are estimated at 2% of GDP per year. The eurozone has significant excess savings so Europe’s role is clear: it should mobilize these excess savings to finance the necessary additional investment, which is the principle behind the investment fund proposed by the European Commission, which is set to become permanent.”

“In response to the COVID crisis, the eurozone has implemented a highly expansionary fiscal policy. These fiscal deficits have been fully monetized by the ECB. But are the long-term costs of this policy well understood? If it gives rise to asset price bubbles, in particular in real estate, it will have very negative social effects (housing access problems).” 

“Despite very high public spending, the French state is not very efficient: the crisis has demonstrated the shortcomings of the healthcare system; those in the education system are clear; the productivity of the French state is low. Given the extent of France’s public investment needs, the French state will have to become more efficient to finance them.”