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Can Hollande pull off a Schröder and will it work?

February 24, 2014
Region:
With the New Year came a new Hollande pledging to build a New France. Still, most of the announcements made in January by the French President merely confirmed a prudent policy inflexion which started last year. Hollande is counting on the solemnity of the speech, putting economic reforms more firmly on the French political agenda. But the reforms are likely to be slow, and the transition will be costly in terms of growth. This will weaken France's reserves of political energy for European reform for many years. Actually, the structural hurdles to reform are more firmly entrenched in France than in Germany 10 years ago. Thus the adjustment is likely to be slower to yield any meaningful results on potential growth than in the German experience and a meaningful structural re-convergence of the two countries will be slow. [more]

More documents contained in "Standpunkt Deutschland (Engl.)"

14 (13-14)
November 26, 2013
Region:
13
The expansion of renewables, while a worthy long-term goal, is presently jeopardising German competitiveness. To prevent this, the Energiewende – i.e. energy turnaround or transformation – must be implemented more efficiently. We welcome government plans to impose a minimum levy on new systems for captive generation. To ensure the levy doesn’t also rise unsustainably, the subsidies should gradually be phased into market-based price and volume mechanisms. The government should tighten exceptions to the levy, while continuing to shield the energy-intensive companies most vulnerable to international competition. [more]
November 4, 2013
Region:
14
The current negotiations between CDU/CSU and SPD towards forming a government point to the implementation, for the first time, of a country-wide minimum wage of EUR 8.50 per hour. Empirical evidence suggests that the effect of a minimum wage is particularly toxic when it is brought to a level that is close to the median wage. This would mean higher wages for about 6 m workers (17% of all workers). A minimum wage will certainly impair the employment chances of groups which already have distinctively higher unemployment rates. If society or politicians do not want to accept the distributional effects of the market, this should be dealt with via taxation and transfers and not by interfering with wage setting. [more]
7.0.7