While there is very little spare capacity in the euro-zone’s labour market, this has not yet fed through to wage growth. The tight labour market and high inflation are likely to push wages up eventually, but not soon enough to alleviate the squeeze on real incomes this year. Against this backdrop, it is no surprise that Marine Le Pen is still faring well in the polls for the next French presidential election. We will be watching these closely next week, as well as the flash Composite PMI for April, which we expect to fall sharply.
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