Covid-19: "The economy is picking up faster than we thought"

Philippe Brassac is the Managing Director of Crédit Agricole. Optimist, the boss of the first bank in France, with 30% of market share, already identifies signs of recovery of the French economy.

Some economic lights have turned green. Should we rejoice or remain cautious?

PHILIPPE BRASSAC. There are indeed indications that the situation could have been worse than it is. The Banque de France, which foresaw growth of -20% in the second quarter, now estimates that it will be -14%. We have to admit: the economy is picking up faster than we thought. The first round has been won! And this was possible thanks to a general mobilization and an enthusiasm of consumers to find a "normal" life. Let's stop brooding and listen to the pessimistic predictions of technicians of the past. This unprecedented crisis is unlike any other and all the economic models that are predicted to us are false.

Are your customers, individuals or businesses confident?

We see that the confidence is there and that consumption is picking up again. The electronic payment terminals (TPE) of our traders indicate that activity has returned to its pre-crisis level: before containment, around 270 million euros passed through the TPE every day. During the crisis, we were at 100 million euros and in June that figure jumped to 300 million euros. There is certainly a catch-up effect, but we did not expect such a rapid recovery.

If the French spend more on credit cards, is it because they make fewer withdrawals?

Well no ! Here again, while some predicted that the French would no longer want to touch cash with the health crisis, the level of withdrawals has returned to the same level as before.

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What about mortgage loans?

From the second half of May, our mortgage simulations returned to pre-crisis levels, ie 29,000 per week. Activity in June was even stronger than last year on the same date!

Is a restaurateur or a flight attendant who requests a credit simulation as lucky as before to obtain a mortgage?

These people may be more structurally affected by the consequences of confinement. It is true that a professional who has not yet been able to resume his activity will have more difficulty in demonstrating his ability to borrow over ten, fifteen or twenty years.

The government anticipates a difficult fall, with bankruptcies and rising unemployment. Should we fear a black September?

I do not believe in the “September wall”. There will probably be sequelae and victims of the crisis, I am not saying the opposite. Certain sectors, such as tourism or transport, emerge damaged. But the government was able very quickly to put in place massive and coherent means, with the support of private salaries or loans guaranteed by the State (PGE), to bridge the economy. In September, partial unemployment will sometimes pay less. But it will not be the end of public or banking systems either! BMP repayments will only start a year from now, not before. We must give the optimistic scenario a chance. The main ingredient in an economic recovery is still confidence.

But will it last if there is a second wave?

This is the real unknown. But if we are in permanent doubt, it will only be negative. Until then, let's stop planning and act!