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Coronavirus: deficit, debt, GDP… the grim government forecasts

2020-04-09T16:39:37.023Z


Bruno Le Maire and Gérald Darmanin unveiled the main lines of the amending budget which will be presented next Wednesday. With ciphers


The government has never hidden it, the consequences of the coronavirus and the resulting containment measures will have very serious consequences for a French economy that is currently at a standstill.

Difficult, under these conditions, to anticipate with precision what the state of the country will be at the end of next year. But political time did not wait, and the Bercy services must today try to establish the most precise forecasts possible.

Because the government will present its amending budget next Wednesday in the Council of Ministers. A bill rich in lessons, since it will not only reflect the prospects drawn up by the executive, but above all will reveal an anticipation of the economic shock of the epidemic. In an interview with Échos this Thursday, Bruno Le Maire and Gérald Darmanin, the two residents of Bercy, presented the main lines.

-6% growth

It is a figure scrutinized every year with attention. This year, growth will reach a level of underperformance never seen in decades. Bruno Le Maire, Minister of the Economy and Finance, does not hide it. “Our growth forecast for 2020 is - 6%. It is the biggest recession in France since 1945, ”he announced straight away.

This figure, despite its harshness, must however be taken with caution. Because this anticipation of decline, already exceptional, could be further aggravated depending on the evolution of the situation. French growth will fall further if the containment continues. But still, even if it ends, economic activity will take time before resuming its cruising speed. "Tourists will not come back overnight," confirms Bruno Le Maire. In industry, production lines can take a long time to restore. "

Deficit explodes, so does debt

For years, the French debt has flirted with the symbolic threshold of 100% of the national gross domestic product. The course was finally crossed last September. A symbol that we could quickly forget, as the degradation is likely to be strong this year. The government is now counting on debt reaching 112% of GDP, while the government hoped to reverse the trend before the crisis, targeting 98%.

The executive, however, defends the need to provide a budget mattress given the circumstances. "This debt meets an imperative: avoid corporate bankruptcies and the sinking of our economy," explains Bruno Le Maire.

Corporate tax, VAT, income tax ... The slowdown in economic activity will severely punctuate the tax revenues of the State. Immediate consequence: Bercy's services expect the public deficit to jump by 7.6% to 170 billion euros, while it targeted a deficit of 93 billion euros at the end of the year before the outbreak of crisis.

Emergency plan doubled to 100 billion

Given the scale of the crisis, the government has decided to double the budget for its emergency plan. Initially set at 45 billion euros, it will ultimately be raised to 100 billion euros. In detail, the government says it wants to almost triple the budgetary measures, which will go from 12 to "more than 35 billion euros".

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The cost of taking on short-time work, initially budgeted at 8.5 billion euros, has been largely revised upwards. The government will reserve in its bill some 20 billion euros, to "take into account the large number of companies that request it," details the Minister of Budget, Gérald Darmanin. In the same way, the solidarity fund will see its endowment go from 1 to 6 billion euros. Enough to allow companies in difficulty, safeguard or receivership, to obtain aid, justifies the executive.

Four billion euros for the purchase of equipment

While the government has recently changed its doctrine on the wearing of masks, the multiplication of orders will also be directly visible on public finances. The budget intended for the purchase of sanitary equipment, which relates in particular to the masks, will thus quadruple, passing from 1 to 4 billion euros. The executive also undertakes to upgrade the health staff, but also to pay bonuses to civil servants who have suffered a work overload or are in direct contact with the public. The amount of these bonuses is still in arbitration, specify the two ministers.

Source: leparis

All business articles on 2020-04-09

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