the situation is not improving

After a strong recovery last year, the French economy is in decline. The Covid-19 epidemic, the war in Ukraine, inflation which is reaching peaks in France, can the situation get worse? “The inflationary shock has not yet fully passed through to the level of consumer prices. It is to be feared that inflation will persist for at least two years. There is little hope that this will improve, especially that there are other threats, such as the resurgence of Covid in China and the risk that the situation will worsen between Russia and Europe”explains Henri Sterdyniak, economist and co-founder of Les Economistes Atterrés.

But to compensate, is a general increase in wages possible? “There are two problems. The rise in prices particularly hits retirees, civil servants and those who receive family benefits who have not had the indexation of the Smic. We could tighten the screws but that would create deep social discontent. It is very difficult to lock in prices for companies, which would end up with extremely low profits”he continues.

On the one hand, the bad inflation and growth figures, on the other the “good” unemployment figures which fell again last month. What impact on the crisis? “There is an astonishing disconnect between employment and growth. Employment is favored by the reduction of labor laws, the creation of precarious jobs and the development of apprenticeship. All this supports the power of purchase of a significant part of the population, but it is not enough”, emphasizes Henri Sterdyniak. Additional difficulties for Emmanuel Macron, freshly re-elected, who notably promised an upgrade for teachers and caregivers.