Germany clearly outperformed France on most macroeconomic metrics in the last two decades. Yet France has implemented many supply-side reforms since 2014. Despite the larger damage taken by France from the current Covid crisis, the lagged effect of these reforms can still help reduce the competitiveness gap with Germany after a few years. However, a key driver of medium-term relative performance will also be how both economies adapt to major “disruption”-related sectoral challenges.
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