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Coronavirus: debt, growth, deficit… the French economy turned upside down

2020-03-17T15:01:46.702Z


A support plan of 45 billion euros for workers and companies, postponement of social security and tax charges ...


"Whatever it costs." Emmanuel Macron, from his first television intervention, on March 12, had had these very clear words when referring to "the war" that France is now waging against the Covid-19. Since then, senior officials from the Ministry of Economy and Finance have had time to take out their calculators to start quantifying the economic and financial impact of this unprecedented health crisis.

Growth at half mast. On RTL, this Tuesday, March 17 in the morning, Bruno Le Maire, the Minister of Economy and Finance, announced that the government was expecting a 1% drop in GDP in 2020 (until then, growth was expected 1.3% in 2020). In short, the estimates are already far, very far, from the −0.1% negative impact on GDP expected at the start of the epidemic. An amending finance bill (PLFR) will be presented this Wednesday in the Council of Ministers. Clearly, this is an updated 2020 budget, taking into account the new expenses. But the worst is never certain. This bad figure of −1% of GDP is only provisional. The law requires that a figure be entered in the PLFR, but "it will undoubtedly have to be reassessed over time", says Bercy. "Developments in the United States, the world's largest economy and one of France's leading trading partners", while certain American states have started to launch containment procedures to deal with the epidemic, will have repercussions on these figures, said Tuesday morning Bruno Le Maire.

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A massive investment plan to stem the crisis. The government's strategy is clear: put the country under cover to curb the spread of the virus, but "take all measures to allow the economy to restart as soon as possible once the crisis is behind us," insists a senior official. For this, an immediate support plan of 45 billion euros, in favor of “workers and companies”, was deployed. At the same time, the state launched a guarantee of 300 billion euros for all new bank loans to businesses. "Today, the banks are heckled on the markets, they are worried about a deterioration of their balance sheet, and they could be tempted to refuse uncertain loans to the companies in difficulty, details Bruno Le Maire. With this device and the state guarantee, they have no reason to refuse. "

The deficit will plunge. How much will it all cost? Lots and lots of money: 45 billion euros for the support plan for employees and businesses, 32 billion euros for the deferral procedures for social and fiscal charges (which could, if necessary, be transformed into cancellations pure and simple), and 2 billion euros per month for the solidarity fund for companies whose turnover melted by more than 70% from March 2019 to March 2020. Hard to make a calculation since the current aid includes both cash expenditure (reallocation of open credits) and budgetary expenditure (State debt). The only certainty: "All of this will lead to a deterioration in public spending in France," notes Bruno Le Maire. In Les Echos, the Minister of Action and public accounts Gérald Darmanin, announced in the wake that the public deficit would reach 3.9% this year. "The specter of a public debt higher than 100% of the GDP has never been so close", loose for his part an official of the direction of the Budget.

Brussels will be flexible. "We ask the European Commission that all the expenses of the emergency plan be considered as exceptional expenses", hammered Bruno Le Maire this Tuesday morning. In short, that they are not taken into account in the calculation of the deficit. The Commission has already indicated that it will examine the accounts of the Member States with mansuetude. Margrethe Vestager, the European Commissioner for Competition, usually very strict on her conception of European treaties, and who in the past has not hesitated to sanction certain countries of the European Union for State aid to their businesses, put water without his wine. Crisis obliges. "The European Commissioner for Competition has renounced certain dogmas," said Bruno Le Maire. Like that of state aid ”. Thus, exceptional aid may be granted to certain sectors hit hard by the crisis - those of transport, tourism and the hotel industry in particular - without attracting the wrath of Brussels. A fortiori, it is the line of Bruno Le Maire, and that of the French European Commissioner for the Internal Market, Thierry Breton, singers of a true European industrial policy (especially in the digital and ecological transformation sectors), which finds colors.

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Towards nationalizations? In the past 72 hours, the Minister of the Economy has notably received Ben Smith, the CEO of Air France, to evoke "the unprecedented shock in the history of the company" that the French airline faces. Certain French champions, precisely, have suffered - or fear - "attacks on the markets", notes Bercy. The State, for its part, therefore does not exclude "exceptional measures" to protect its flagships: "acquisition of stakes in large companies, even nationalizations," insisted Bruno Le Maire. The privatizations - effective (French games) or planned (ADP Group, ex-Aéroports de Paris) - of the beginning of the five-year period have never seemed so distant.

Source: leparis

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