&NewLine;<h1 class="wp-block-heading">"THE PORTUGUESE MIRACLE </h1>&NewLine;&NewLine;&NewLine;&NewLine;<p>Far from the dogmas of Brussels and French fiscal policy, Portugal's success lies in boosting investment and cutting taxes, explains economist Sébastien Laye.</p>&NewLine;&NewLine;&NewLine;&NewLine;<p>We need to put aside any form of slavish reverence for economic policy&comma; in order to better understand the lineaments of each country's success&period; <em>"Take Singapore&period; It looks like an economic miracle&period; But the miracle is less one of inspiration than one of perspiration&period;"</em>These words from economist Paul Krugman in 1996 should lead us to put the various economic models into perspective&colon; the Japanese model&comma; the Anglo-Saxon model&comma; the Scandinavian model&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Yet there is one country in Europe which&comma; not content with having emerged from the abyss of the financial crisis&comma; is now in an insolent state&colon; it's Portugal&period; In many respects&comma; analyzing the proponents of Portugal's current economic success is forging intellectual weapons that the current majority sorely lacks to finally beat unemployment and emerge from sluggish growth&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<p>First and foremost, the facts. <strong>2013 unemployment</strong> culminated at <strong>nearly 17&comma;5 &percnt;</strong>&comma; it is now <strong>7&comma;9 &percnt;&comma;</strong> while in France unemployment seems to stagnate at around <strong>9 &percnt;</strong>&period; It's hard to remember a time when the differential between the two countries was in Portugal's favor... In terms of public finances&comma; the deficit is 2 &percnt; of GDP on average, compared with just under 3 &percnt; in France&comma; even though Lisbon's stock of public debt&comma; inherited from the crisis and previous mismanagement&comma; still peaks at 122 &percnt; of GDP&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<h2 class="wp-block-heading">Public finance overhauled</h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>After negative growth rates between 2011 and 2013&comma; the <strong>Portugal</strong> recorded a <strong>growth of 1&comma;6 &percnt; in 2016 and 2&comma;7 &percnt; in 2017</strong> &colon; unlike France&comma; this pace is not weakening&comma; since in the first half of 2018&comma; the growth acquis was 0&comma;9 &percnt; &lpar;0&comma;4 &percnt; in France&rpar; with thus the certainty of having a final growth still well above 2 &percnt; in 2018 &semi; <strong>even though the Portuguese economy does not need the same level of growth as France to create jobs&period;</strong></p>&NewLine;&NewLine;&NewLine;&NewLine;<p>No doubt thanks to a labor market structure dominated by services&comma; far more intrinsically flexible than even labor law&colon; this phenomenon is glaringly apparent in seasonal employment in the hotel and catering industry&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<h2 class="wp-block-heading">Sustained domestic demand</h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>But most of Portugal's current success can be explained by two phenomena&colon; the revival of investment on the one hand&comma; tax competition on the other&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Portugal's current left-wing majority has consciously flouted Brussels' dogmas&period; indeed, Brussels has repeatedly warned Lisbon&comma; criticizing the absence of labor law reforms and budgetary frameworks&comma; before having to tone down its criticism in the face of Portugal's insolent success&period; no structural reform of the labor market to make employees' rights more flexible&comma; no lowering of social protection&comma; even less freezing of the minimum wage or retirement pensions&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Portugal has opted to bolster domestic demand by stimulating investment, which at 17% of GDP is close to the German level, but with lower inflation. The government has massively cut taxes for the middle classes and the burden on small businesses, while encouraging its industry to move upmarket from a traditional model. <em>low cost</em>to boost export market share&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<hr class="wp-block-separator"/>&NewLine;&NewLine;&NewLine;&NewLine;<p>In a way&comma; the Portuguese success and the French slump are just the obverse and the reverse of the same reality&comma; in a curious game of communicating vessels on a European scale&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<p>In Lisbon&comma; growth is visible in the enthusiasm of entrepreneurs and especially young people&comma; in the internationalization and optimism of investors &colon; the whole world comes to do business in Portugal&period; The contrast with France and its false calm of summer 2018 is all the more striking&comma; against a backdrop of breathless growth and shattered hopes...</p>&NewLine;&NewLine;&NewLine;&NewLine;<p><a href="https://www.lemonde.fr/acces-restreint/idees/article/2018/08/28/cb61daeb52120424a49645264493e54b_5347083_3232.html">source</a></p>&NewLine;
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