Working from home and corporate real estate

As employers and employees established ways of working remotely to limit physical interaction during outbreaks of Covid-19, teleworking became increasingly routine. This column examines how corporate real-estate market participants adjusted to the growth of teleworking in France, and finds that it has already made a noticeable difference in office markets. In départements more exposed to telework, the pandemic prompted higher vacancy rates, less construction, and lower prices. Forward-looking indicators suggest that market participants believe the shift to teleworking will endure.

The impact of shortages on manufacturing in the EU

Shortages in material and equipment weighed heavily on activity and sentiment in the European economy in 2021. This column uses cross-country and cross-sector data from the European Commission’s Business and Consumer Surveys and finds a strong negative relationship between shortages and industrial output. Shortages appear to have detracted some 5 percentage points from the EU manufacturing output growth between January and October 2021.

Reducing public debt need not be a punishment

An important vulnerability of the EU economy is high public debt levels. This column proposes revisions to the EU fiscal rules to stimulate debt reduction, which would create budgetary room for stabilisation and growth-promoting spending and also support growth convergence among member states. Climate investment should not interfere with the fiscal rules but be financed through an EU fund, in line with the idea of subsidiarity. It should co-exist with uniform pricing of all greenhouse gas emissions.

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