Edward Sonnino
Jul 30, 2017 · 2 min read

Macron’s Success Depends on a Big Tax Rebate in the Euro Zone Financed by Draghi With QE

Emmanuel Macron is right that reforms are needed to enhance France’s future economic growth. But in order to make the reforms politically possible, what France needs is to first have a rapid, strong economic recovery and very low unemployment. For that, France needs a big tax rebate of about 5,000 euro’s for each Euro Zone tax payer financed by Mario Draghi, president of the European Central Bank, through QE.

In fact, the long recession with very high unemployment in France and other Euro Zone nations was due to a sharp drop in consumer spending due to lower personal income. And the only way to quickly increase personal income and consumer spending is through tax rebates.

Since France currently has a large budget deficit, it can’t finance a big tax rebate. But the European Central Bank can easily finance a big tax rebate through QE financing. The ECB has already used enormous amounts of QE to save the banks and finance corporate and sovereign debt, a necessary measure. But Draghi should have also used QE financing to stimulate personal consumption through a big tax rebate, the only way to quickly have a strong economic recovery in the entire Euro Zone. Since all taxpayers of every Euro Zone nation would receive exactly the same tax rebate amount, no one would have any reason to complain.

President Macron needs to understand the importance of having a big tax rebate financed by Draghi through QE sooner rather than later, without which a strong economic recovery and much lower unemployment will take a long time, causing Macron to lose credibility and his reforms to be blocked.

July 29, 2017

© Edward Sonnino 2017

@EdwardSonnino