Europe: “No pressure to raise wages”. No inflation, but permanent misery on the Old Continent.

Unlike the US, no expectations of “Good” inflation in the EU. Volkswagen, Europe's largest private-sector employer, said it was under no pressure to raise wages, bolstering central bankers' estimates that the region's economic recovery from the coronavirus outbreak is unlikely to trigger an outbreak. sustainable inflation.

"We see no signs of pressure on wage inflation in our major markets," VW chief financial officer Arno Antlitz told the Financial Times. "It is difficult to say from today's perspective whether this will change, but we do not expect it."

His comments reflect comments made earlier this week by Philip Lane, the ECB's chief economist, about the possibility of companies passing higher costs on to consumers. He said: "The fact that pricing power may have been rediscovered by some global companies alone is not enough to create permanent inflation: a strong labor market is needed."

Euro zone inflation turned negative in the closing months of last year, but rose to 1.6 percent in April. The ECB expects it to reach its target, but close to 2% by the end of the year, driven by increasing supply-side price pressures and the recovery in consumer demand. The Federal Reserve also expects price hikes in the US to exceed its 2% target this year, but Biden, for better or worse, has sent the money straight into the pockets of citizens, and massively. The ECB has funded very limited national aid programs and will help finance the famous Recovery Fund, which will be small and spread over time. Nothing to do with Biden's plans.

Most economists believe these inflationary pressures will ease by 2022 as it will take some time for labor markets to recover from the shock of the pandemic and delay any significant wage increases, and Volkswagen confirms this view. The ECB estimates that inflation in the euro area will fall to 1.4% by 2023.

Are you all right then? Not so. The Green Deal will impose on thinking European citizens increases in fixed costs, from transport costs (an increase in fossil fuels, for example) to electricity and other domestic users, as Italian citizens are already feeling. This will lead to a strong reduction in purchasing capacity, with a reduction in non-essential consumption. In the absence of a wage dynamic we are condemned to self-create an economic crisis, which will be felt on the skin of European citizens and on their future, with the influence on demographic trends. I recall extinction for induced poverty.

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The Europe article : “No pressure to raise wages”. No inflation, but permanent misery in the Old Continent. comes from .

This is a machine translation of a post published on Scenari Economici at the URL on Fri, 07 May 2021 09:00:22 +0000.