In other words, phasing out the early retirement scheme can contribute both to improving public finances and to strengthening the growth potential of the economy, thereby providing a permanent wealth gain. Few alternative measures can match that.
Potential growth is the determining factor for how difficult it will be to achieve the 2020 plan’s target of reducing public consumption as a ratio of cyclically adjusted GDP from 29 to 27 per cent. The lower the potential growth, the more painful the process will be. In the coming decades demographics are against us.