Alternatively, there would be a slight acceleration in the productivity of labour due to the drop in total hours worked. Some companies in order to achieve the same would tend to modernize their capacity of production, this as a result would render an upside pressure on the investments by non-residents. Thus, it can be said that the overall impact on the total investment by corporate is hard to calculate and would therefore be dependent on the capacity of the firm to modernize their process.
Higher growth in wages
On the basis of the historical records, there is a high correlation amongst the earnings of the worker and their productivity. Hence, it could be said that there would be a slight rise in the wages due to the slight acceleration in productivity of labour in the years to follow. This can be regarded as good news for the workers of the given economy. But, it must also be taken into consideration that since the rise in the productivity forecast is very low, thus the rise in the wage growth might not be sufficient enough so as to completely offset the total slowdown in the earnings of an economy because of the lower growth in the hours worked.
Lower rise in budgetary revenue
There is a very close relationship amongst the growth of nominal GDP and the budgetary revenue growth of the government at all the levels. As a result, there would be a lower rise in the personal income tax because of the lower rise in hours worked (Francis, 2008). It has been seen in the above discussion that the growth of corporate profit might also be lower which would further lead to falling corporate tax gains. From indirect taxes like various sales tax and goods and service tax there would be a curb in the government revenue due to weaker growth in non-residential investment and consumer spending.
Increase in Public debt and fall in the growth of public spending
Some tough choices would have to be made by the government due to a lower growth in the budgetary revenue. At the same time, the government might also decide to lower down the public expenditure. Over the coming years, the budget spending would be under significant pressure as there would be an impact on the health care spending as the population ages further. Budget cuts in other kinds of spending under these conditions could be very high. Some expenses have to be prioritized by the government in this case and various other expenses would be called into question.
Lower rate of interest
There would be repercussions for the rate of interest with the advent of the weaker potential of growth and would result in a lower rate of interest. Neutral key rate is defined as the risk-free real rate of interest which allows the economy to function in full capacity with stable rate of inflation after the cyclical forces have been debauched. Thus, by combining the real GDP growth potential and the annual inflation rate, the nominal neutral rate of interest could be estimated easily. Taking into consideration the stable growth of price, a lower neutral rate of interest is implied by a weaker economic growth.