The coronavirus pandemic will very strongly affect the French economy in the short term, according to forecasts published Wednesday by the European Commission. The European executive anticipates this year an 8.2% drop in our gross domestic product, resulting in a public deficit of 9.9%. In the first quarter, France entered a recession with a 5.8% drop in its GDP.
Brussels then forecasts a significant recovery in activity in 2021, with a GDP up 7.4%, but stresses that this projection remains "subject to a high degree of uncertainty". Despite this announced recovery, the impact "on certain sectors could be long-lasting," the Commission points out, citing catering, hotels, leisure activities, transport and tourism.
The support measures taken to fight the pandemic "amount to 1.9% of GDP", says the Commission. Consequence: the public deficit could reach an “unprecedented” level in 2020, at 9.9% of GDP. "With unchanged policies and assuming that the measures adopted to fight the pandemic will not apply until 2020", this deficit could appear at 4.0% of GDP in 2021, according to Brussels.
An unemployment rate of 10.1% in 2020
France's debt is expected to widen considerably, to 116.5% of its GDP this year, before reducing slightly to 111.9% in 2021. It reached 98.1% of GDP in 2019.
Unemployment should "increase due to the severity of the economic slowdown, but the short-term activity plan put in place by the government should help contain the increase," said the Commission. However, it should reach 10.1% in 2020 and 9.7% in 2021.
France has implemented several measures to fight the pandemic and mitigate its effects. Among them, 8 billion euros in additional health spending, 24 billion transfers to cover unemployment schemes, 7 billion in subsidies under the sectoral compensation fund for very small businesses and the self-employed, and 2.5 billion for the creation of an emergency fund.
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