Paris tragedy will have limited economic effects

It goes without saying that the loss of life and the social impact of the Paris attacks dwarf any consideration of their economic consequences. But we doubt that the near-term economic impact will be major. Similar tragedies in Madrid and London had only minor effects on retail sales and confidence. And the initial muted response of equity markets bodes well.

To the extent that there are any significant economic effects, they are more likely to apply to the longer term. The attacks seem set to increase resistance to the immigration flows that might otherwise have boosted the euro-zone’s growth prospects. And in France itself, rising support for the National Front threatens to reverse what little progress has been made to reform the sclerotic economy.