Increase in purchasing power: “The figure of 850 euros seems credible” for economist Philippe Waechter

The chief economist of Ostrum Asset Management reacted to the announcement made Tuesday by Edouard Philippe of an increase of more than 2% in the purchasing power of the French.

The “Average purchasing power” of the French will progress “More than 2%” in 2019, either “An average gain of 850 euros over the year per household”, announced Tuesday, May 7 the Prime Minister Edouard Philippe. “The figure of 850 euros seems credible”, reacted Wednesday on franceinfo Philippe Waechter, chief economist of Ostrum Asset Management.

franceinfo: Does this increase seem credible to you?

Philippe Waechter: These are figures that one can imagine with regard to the measures which were announced, in particular in December, and which are of the order of 400 euros approximately on these 850. You add the housing tax, reductions of charges, all these factors have a positive effect on the evolution of purchasing power. The figure of 850 euros seems credible.

Who will benefit?

Those who benefit from the increase in the activity premium, those who benefited from the tax-exempt premium at the end of the year and all French people who will benefit from the reduction in the housing tax. Not everyone will get 850 euros more during the year. The big winners are all the middle classes who will benefit directly from the reduction in the housing tax and the lowest incomes who will benefit from the measures that were decided in December.

Who is in the middle class?

We are in the middle class when we are at the median income level, 1,776 euros in 2016. So that represents 60% of employees.

With these measures, is Emmanuel Macron still the president of the rich?

When you look at the distribution of measures, the 1%, 2% with the highest incomes are always the big winners. But we can clearly see that for some French people, the measures taken today generate a tax advantage, a positive element in their taxation.

In 2020, we expect a drop in income tax. Will it be a good year for purchasing power?

It will be less strong than what we will have observed in 2019, but it will come above. The purchasing power gains of 2019 will not be erased in 2020. The drop of 300 euros will complement what was observed in 2019.