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11 Jun 2013
Flash: Insight reform in Europe – Deutsche Bank
FXstreet.com (New York) - Potential GDP, estimated by reference to past trends on productivity and labor market participation, and taking the UN demographic projections as baseline, would hover at around 1% in France and Spain, and would tend to zero in Italy – something has to change.
According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “What the governments in these countries have implemented so far would, in our view, boost, potential GDP by 0.2/0.3% in Italy and Spain. However, this is for the time being offset by the negative impact of youth unemployment – which lowers productivity – and higher taxation.”
“We thus believe that the priorities for further reforms are clear: labor market dualism has to be curbed and the tax structure has to be improved, towards less pressure on labor income offset by higher indirect tax All three counties need to make more progress, but in our view Italy – as epitomized in our synthetic reformeter – is faced with the most daunting challenge. There, improving service delivery by public administrations should be in focus.” they add.
According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “What the governments in these countries have implemented so far would, in our view, boost, potential GDP by 0.2/0.3% in Italy and Spain. However, this is for the time being offset by the negative impact of youth unemployment – which lowers productivity – and higher taxation.”
“We thus believe that the priorities for further reforms are clear: labor market dualism has to be curbed and the tax structure has to be improved, towards less pressure on labor income offset by higher indirect tax All three counties need to make more progress, but in our view Italy – as epitomized in our synthetic reformeter – is faced with the most daunting challenge. There, improving service delivery by public administrations should be in focus.” they add.