Eurozone: The inflationary nature of the return to regional value chains – Natixis

It is more or less taken for granted that the return to regional value chains may be inflationary in the eurozone, per Natixis.

Key quotes

“Onshoring back to the eurozone will drive up production costs relative to production in emerging countries.”

“When value chains are regional, investment takes place in the regions where domestic demand is vigorous. Economic policy must, therefore, switch from supply-side policies, aimed at improving competitiveness, to demand-side policies, including faster wage growth, which is inflationary.”