When the activity restarts slowly in France, the impact of the shock inflicted by the confinement on the economy is accurate. It is now clear that many areas will not get out of this crisis before years, if ever. Following the economists, the government has therefore revised downwards its growth forecast. In the third project of finance law amending 2020, which will be presented by Bruno Le Maire and Gérald Darmanin in the Council of ministers Wednesday, 10 June, the assumption of the evolution of GDP has been set to – 11 %, never before seen in peace time.
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“This simply means that the economic shock is extremely brutal, has explained the minister of Economy on Tuesday morning on RTL. This also means that we have to give all the measures to revive growth by 2021.”Among these solutions are the sectoral plans dedicated to tourism, culture and event management in the broad sense, but also to the automotive, aerospace, building, and tech, which will be discussed in the framework of this new amendment to the finance act. Between incentives to the consumer and business aid, these plans hope to limit the bloodshed that threatens these areas.
Bercy is also preparing a recovery plan focused on supporting business investment, the terms of which are expected for the end of August. “This recovery will redo the link with our economic policy for the supply, competitiveness, innovation. It must be coordinated with all of our european partners and it will need to be green, has once again reminded Bruno The Mayor, the Assembly, on Tuesday afternoon. We want to transform our economic model. Let’s make this crisis the chance of a bounce green our economy!”
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All of these plans are expensive. Bercy does not communicate even the most recent estimates of increase in public deficit and debt for the year. In April, they were fixed respectively at 9 % and 115 % of GDP. In the wake of the growth, these indicators will also be degraded, the debt is expected at around 120 %. In the initial budget act passed in December last year, the executive was forecasting a modest growth of 1 %, after 1.5% in 2019. In 2020, the economic growth was in effect from the outset handicapped by the wrong last quarter of 2019, which influences the slope of the “ramp launch”, or the”acquired growth”, of the following year.
Prudence of households
The estimate was subsequently revised, when the first amending finance act passed at the beginning of the containment, the end of march, – 1 %. At the time, the government hoped that the activity is picking up significantly in the second half. Then, in April, the extreme violence of the crisis appeared inevitable, and the assumption of rapid bounce-back, unlikely. The second draft of the law amending the finance was reckoning on a contraction of 8 %. The new estimate of 11 % is more in line with the forecasts of economists, who worry about the difficulty of consumption to bounce back. “The French economy has passed its low point. The déconfinement has led to a resurgence of activity and employment, ” notes Philippe Waechter, Natixis, Ostrum. However, the levels recorded still show a contraction in activity and a great care of the household.”
The editorial team conseilleCroissance, deficit, unemployment: all these forecasts being wrong by the coronavirusSujetsBruno The MaireCroissancePIBAucun comment
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