It's a well-run business. Presented in September 2020 and with a budget of €100 billion, the vast French recovery plan has been deployed effectively. At the end of November 2023, the plan's disbursement rate stood at 73%, according to the plan's evaluation committee, which published its new report on Tuesday. The economists in charge of this evaluation note that "the envelopes and the forecast pace of disbursement of the recovery plan have been well respected; the territorial distribution is balanced; the targeting of the schemes is encouraging in several cases, for example with the gains for industry via the reduction of production taxes, or the targeting of low-income households viaMaPrimeRénov'".
This is probably the first time in its history that Bercy has deployed a plan of such magnitude so quickly. In terms of implementation, the success is clear. Has this 100 billion been spent wisely? The answer is not simple because the plan covered more than 100 measures of all kinds, including the reduction of production taxes (for 10 billion euros). The evaluation committee of the plan, which works within the framework of France Stratégie, has therefore focused on a few major measures with quantifiable effects.
On the employment side, the committee relied on the assessment of the French Economic Observatory (OFCE), which estimated that the recovery plan had created 350,000 jobs in 2022, thanks to measures in favour of apprenticeship aid and support for the renovation of buildings. The exceptional aid for apprenticeship would have made it possible to create 200,000
jobs in 2021 and 2022 for an average budgetary cost of 20,000 euros per job, "which corresponds to the lower limit of what can be found in the employment policies deployed in France", according to Cédric Audenis, acting commissioner general of France Stratégie.
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Decarbonization of industry
The support schemes for the decarbonisation of industry and the car bonus have also served their purpose. According to the Institute for Public Policy (IPP), the car bonus alone would explain 40% of the increase in "the market share of electric vehicles". Decarbonisation aid would have saved 4.5 million tonnes of CO2. Taking into account deadweight effects, the budgetary cost would then be around €19 per tonne of CO2 avoided.
The MaPrim'Renov' housing renovation scheme has been acclaimed by individuals. On the other hand, it struggles to trigger large-scale renovations since only 27% of cases involve at least two actions. Above all, 4% of renovations concern collective housing. The subsidy for the works would have reduced CO2 emissions by up to €70 per tonne of CO2 avoided. "This is a relatively low cost, even if it neglects the rebound effect, i.e. the fact that households tend to heat more once renovations have been completed," said economist Xavier Jaravel, chairman of the evaluation committee.
On the other hand, the cost of renovating public buildings amounts to
700 euros per tonne of CO2 saved. "These figures give an idea of the overall cost of decarbonising the economy," Jaravel said. Our point is not to encourage only the least costly measures to be carried out because the economy as a whole needs to be transformed, but it is important to measure these cost differences."
Falling productivity
From a macroeconomic point of view, according to the OFCE, in 2022, the plan contributed 1.4 points of gross domestic product (GDP). After the shock of the shutdown in 2020, the measures were supposed to allow France to return to the pre-crisis level of gross domestic product (GDP) in the summer of 2022. The goal was achieved, ahead of schedule. "France was one of the first major economies to return to its pre-crisis level of activity," said Sylvie Montout, budget rapporteur. However, the plan's contribution to this rebound appears to be in the minority. In the medium term, its effect also seems to be fading. "In the third quarter of 2023, French GDP stood at 1.8% above its level in the fourth quarter of 2019, compared with 2.3% for the euro area," the evaluation committee said.
More worryingly, according to the latest data, the plan, despite its undeniable successes, has not been able to counter the great weakness of the French economy: the fall in its productivity. "We do not yet know the trend of this evolution, but the measures to support investment and competitiveness of the France recovery plan do not seem to be able, on their own, to counter it," says the report. Among the 'points of vigilance' highlighted, the evaluation committee stresses that 'the measures to modernise industry have not been used for investment in the latest technologies'.