And three. After a first amending finance act passed in march, a few days after the start of confinement, followed by a second in April, the government has presented, on Wednesday, a third PLFR (project finance law) in the council of ministers. The latter must take into account the evolution of the economic situation, as well as the various sectoral plans announced in recent weeks. Summary of the main points.

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Bruno The Mayor, “the severity of the crisis calls for a massive response and immediate. All of the money spent on this response represents 460 billion euros, or 20% of the wealth of the French national” or the equivalent of the GNP of austria, against “only” a little more than 400 billion euros foreseen in the latest draft law amended finance. This increase is explained by a number of plans recently announced for the aviation industry ($15 billion), tourism ($18 billion), the French Tech (1.2 billion) or the automotive ($8 billion). Add to this pot of aid for the sector of the book (“more than 230 million euros”, according to the minister of Culture, Franck Riester), of culture, of the building and of the small trade. A part of these measures are under discussion and will be clarified during the parliamentary debate. The State, for example, is “ready to support” the additional costs incurred by the health rules on the construction sites, said the boss of Bercy.

The plans unveiled in recent days must “support a number of sectors most at risk, and, with them, hundreds of thousands of jobs”. This sector strategy should allow “to avoid squandering the public money, or to spread it in the sand,” said the minister. On the longer term, the government hopes to be able to take advantage of the crisis to “speed up the transformation of these sectors”, “to prepare for the post-crisis and with the industrial fabric of the most efficient as possible”.

Several other complementary measures

Among the other measures should include a “massive plan of support” for local communities, of the order of € 4.5 billion, with a doubling of budget allocations for investment, and several billion advanced for the departments. The emergency shelter is also expected to see its “increase in appropriations of eur 200 million”, the budget allocated to the fight against violence against women will increase to 7 million euros and the PLFR3 will contain “exemptions from employers’ contributions unprecedented for whole sectors”. For example, “any company with fewer than 50 employees may request the cancellation of his or her contributions, if the situation demonstrates” or a “spread up to 36 months of his charges,” said Gérald Darmanin.

To the extent, a decrease in VAT is not the order of the day. It would cost “very expensive” to the State and is not the solution “the most efficient way to protect jobs and support businesses,” said Bruno Le Maire.

Growth

Mid-march, the executive was forecasting a growth to -1% in 2020. A forecast is considered to be conservative, at the time, which has steadily deteriorated since, reaching -8% in the last PLFR. Now, the Bank of France, assumes that the GDP will decline about 10% this year, while the government speaks rather of -11%, a decline created in part by the fears of the households, who prefer massive saving rather than consuming. In a “perfect black”, in which the epidemic would resume in September, the annual growth would be leaded, to -14%.

Consumption, households ‘ purchasing power

For their part, households should see their purchasing power decrease of the order by 1.4% “because of the decline in earned income for employees and self-employed workers linked to the sharp decline in GDP and the decrease of the income of the property”. On the year as a whole, household consumption is expected to decline by 10% and should return to normal “in some areas” by the fall. Others will be reduced more extensively.

The household savings is expected to explode, the rate could increase to 22.6% at the end of the year, compared with 14.9% in 2019. The “behaviors of precautionary savings would increase in the face of rising unemployment”, states the government.

Deficit

So that the first PLFR provided for a public deficit of 3.9% instead of the 2.2 per cent initially expected by the government for 2020, this third text endorses the increase of the bill for public accounts. The deficit is expected to increase up to -11,4% of GDP, well beyond the levels set by Brussels. Nevertheless, the structural deficit would remain limited to 2.2 percentage points of GDP, most of the measures are temporary. The budget deficit of the State should, in fine, up to “222,1 billion euros”, when one of the social Security will reach “51 billion euro,” according to Gérald Darmanin.

In addition, “the ratio of public expenditure would be revised in a very strong increase in […] It would amount to 63.6 % of GDP, excluding tax credits. Public spending is expected to grow from 6.4 % in value in 2020, after 2.3% in 2019”. State spending will increase while its revenues will decline due to the degradation activity and to the lower inputs of several taxes, such as VAT as of the TICPE.

public Debt

One thing is for sure : the public debt will reach a level never seen before. Bercy provides for a debt representing “approximately 121% of GDP”, a spectacular leap compared to 98.1 per cent recorded at the end of 2019. The forecast of debt has steadily increased from 98.7% in the PLF 2020 to 102.9% at in the first PLFR, 115,2% in the second and over 120% in the latter text. The final level could be even higher, some of the measures had not been taken into account in this third PLFR. “Since the creation of the euro in 1999 and until last year, such a debt level had not been reached within the euro area and by very few countries,” recalls the High-conseil for the public finances on Wednesday.

We exclude any tax increase to fund this debt

Bruno Le Maire,

“We have made the choice to save our economy”, and this choice is assumed, said Bruno Le Maire, adding that he would reimburse. It will be refunded “after the return of growth”. “There was a phase where we invest a lot of public investment (sic) […] and we exclude any tax increase to fund this debt”.

Job

again, notice big time. Bercy expect to see a drop “important” total employment” in 2020, of the order of-2.8%, or about 800,000 net new jobs in the least, depending on the PLFR. These losses are, however, limited by the success of the scheme of partial unemployment, in force for several months. “By 2020, total employment is set to contract sharply,” says the document.

The PLFR3 therefore contains in particular the “measures mass to support learning”, of the order of 300 million euros. Others are “in negotiation, as the activity of the partial’, which should help to avoid the “dramas of social and a loss of human capital”.

Alert on the finances of France

The massive rise of debt as a deficit weakens “medium-term sustainability of public finances of France, and calls for particular vigilance,” said the High council for public finances. In an opinion made public Wednesday, the institution calls on the executive to control the massive rise of debt as the deficit, which reached a level “not seen since the Second world War”. The coming months will be difficult : more bankruptcies, less investment, difficulties which will continue to exist in some sectors, behaviors sitters of consumers, weak tourism flows… so Many elements that may limit the prospects.

The High council shows up, however, is less cautious than the government on certain points. First, he explains that”a continuation of the favourable evolution of the health environment and use more strong in the second half of that retained in the assumptions of the government savings constraint accumulated by households could lead to a recession less marked” than the 11% provided for in the PLFR3. Then, “the job could be a little higher than expected”, according to the changing market conditions.

For its part, the government pointed out that this will be followed by “national recovery plan” : “the economy can emerge stronger, competitive and sustainable of the economic crisis”, through, for example, to relocations, has put forward the head of Bercy. This last question will be addressed in the recovery plan, and should be based on several research studies aimed at determining the sectors to relocate, in which France has “technology and know-how” to put forward. The minister cited the example of the “electric car”, the “quantum computation” or “hydrogen”.

The editorial team conseilleCovid-19: businesses are clamoring for the lifting of the constraints that hinder the relanceUn plan strengthened support for the BTPSujetsBruno The MaireGérald Darmaninfinancedette9 commentairesle 10/06/2020 15:54

beautiful heads of winners in the photo!

visparkerle 10/06/2020 15:41

rain of billions of euro are being poured by the state and yet… According to the OECD, France will save one of the most strong falls in GDP in the world…..in the journal the world of this day! We are also among the countries with a high mortality rate in the face of the coronavirus….We are the champions with the worst president of the fifth republic.

efbele 10/06/2020 15:23

Grosso modo, government, PS, LR… or the neighbouring countries, not the choice, the principles remain the same.
– debt.
– assist companies in difficulty (offer)
– assist households in difficulty (request)
– ecological factors. a
…
The program RN ? a
For or against the euro ? a
For or against the Frexit ? a
For or against the CAP ? a
…
it depends on the polls.

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