"The economic crisis is fueling"

How to revive growth in the euro zone? Under discussion by the European institutions on economic policy , the French Economic Observatory ( OFCE ) this Friday, Dec. 6 report in partnership with the Danish Economic Council of the Labour Movement and the German Institute for macroeconomic policy. Interview with Xavier Timbeau , director of the department analyzes and forecasts OFCE .

What are your conclusions?

- We are not in a recovery phase . The crisis continues . The problems have not disappeared , they moved : it reduced deficits by creating unemployment. And is fed the crisis, by promoting poverty, and pulling down wages . This devaluing wages, real, especially in Spain, will spread to other countries such as France . And competitiveness that goes with it will not last. We will be overtaken by deflation, falling prices and wages will push up the price of the euro , and cancel our competitiveness gains . In the end, the public debt will increase, and the single currency is again threatened .

Yet the European Central Bank does not expect deflation ...

- What we are describing is a dynamic long . Deflation is a phenomenon that always takes time to settle . But it is very difficult to escape. The Central Bank lowered its key rate there is a month which , by reducing the cost of bank funding , and therefore businesses and households , stimulates the economy. But to prevent deflation occurs , it takes strong measures .

What do you recommend ?

- First, we believe that we must reduce the interest rate differentials between countries. We borrow too much in Spain or Italy compared to Germany or France . The European Central Bank has the opportunity to remedy this, provided that countries commit themselves specifically on the management of public finances in the medium term. Then , we must fight against inequality through tax reforms , implement measures against poverty. We must not allow the situation to deteriorate. We also propose to use the minimum wage as a means of adjustment among countries, flexibly because , of course , countries do not have the same labor markets.

Finally, we believe it is necessary to boost public investment. It fell 2 percentage points of GDP in the euro area between 2007 and 2012. It may invest € 200 billion per year in transport infrastructure ( roads, bridges, railways ) should be avoided and the networks do not collapse , and it will create 5 million jobs . This is not insignificant when you think that there is 19 million unemployed in the euro zone .

You presented your findings to the European Commission. What does she think ?

- We have differences . The European Commission has recognized that its austerity had more serious consequences than expected growth, but believes it was necessary , and now it will be less detrimental . So she wants to continue the fight against public deficits in the same way . We believe, however, that the current situation is a consequence of this policy.