Political uncertainty is pushing companies to be cautious in their investments, despite a more favorable economic environment. “When there are shocks of uncertainty, which we measure through the financial markets or by asking the question to companies, we have behind us a drop in activity that is transmitted mainly through investment,” the head of the economic service of the INSEE, Dorian Roucher. , on the set of BFM Business.
Almost unanimously, the unions and business organizations themselves signed a joint press release addressed to political leaders, calling for the return of “stability, visibility and serenity”; only the CGT did not participate.
Surveys carried out by INSEE show “a small increase” in the number of companies that declare they have “difficulties in predicting what will happen in the next three months”, but “it is not massive at this point”, qualified Dorian Roucher, adding that “The current uncertainty is still less strong than at the time of the health crisis, when you really didn’t know what you were going to be able to do tomorrow.”
“Pessimism Supplement”
However, on the investment side, it is “logically” possible to observe “an acceleration, in any case a less pronounced fall” in investment, “since the fall in rates would begin to extend to business investment,” he continued. But that is not the case today. “When we look at companies’ responses, we see that they continue to be very cautious, much more than the macroeconomic determinants would suggest,” said the INSEE analyst.
Companies are being “cautious when investing in factories” because “they don’t know what the fiscal and social environment they will face will be” in the coming times, he said.
“We do not take full advantage of the drop in rates because the uncertainty factor slows down investment,” summarizes the head of the INSEE economic department.
Source: BFM TV
