According to the OFCE, the policy of the European Central Bank (ECB) should continue to bear fruit in the coming months in the face of inflation. Price increases would calm down, although at the cost of a clear slowdown in economic activity. Growth in gross domestic product (GDP) would thus reach 0.8%, (when Bercy targets 1.4%). Monetary tightening would reduce it by 0.9 points after 0.4 points in 2023. And the energy shock by 0.3 points.
The weak growth in activity would cause a downturn in the job market. For the OFCE, unemployment, which had reached a low of 7.1% at the start of the year, would rise again quickly. By the end of 2024, it would have risen to 7.9%. “The possibility of full employment would therefore recede,” economists argue.
The increase in the unemployment rate could also be explained by an increase in productivity, which has plateaued since covid, while many companies kept inefficient employees in employment. “The drop in public support for businesses associated with the exit from “whatever it takes” and the repayments of State Guaranteed Loans (PGE) as well as the return of working hours to their 2019 level should lead to make up for part of the observed productivity losses”, argue the OFCE authors.
Despite this rise in unemployment, purchasing power should be maintained next year. It would even increase by 0.4%, due to the increase in real wages (0.6%). “Thus in 2024, real household income per consumption unit would be 2.5% above its 2019 level while GDP per consumption unit would be slightly below its 2019 level (-0.3 %)”. In other words, during these four years of intense turmoil, household incomes were preserved more than those of businesses.
