The French economy bends but does not break.
In a note on the situation published this Friday, the National Institute of Statistics and Economic Studies (Insee) presented its estimates concerning the evolution of France's main economic indicators for 2022. Estimates which will be scrutinized by the executive before launching its next measures on purchasing power.
The title of this note, "War and Prices" (a nod to Tolstoy's novel) says a lot about how the international context - war in Ukraine, threats to energy supplies or even the "zero Covid" strategy of China — weighs on the country.
But the French economy is currently showing a certain resilience, despite inflation which should climb to 6.8% at the end of the year.
In 2022, it should stand at 5.5%.
The extended tariff shield
Admittedly, such a level of price increase has not been seen since 1985. It nevertheless remains lower than in the other main economies of the euro zone.
“And above all, without the price shield on gas and electricity prices put in place in November 2021 and the discount at the pump for fuel five months later, inflation would have been two points higher, explains Olivier Simon, Head of the Economic Summaries Division at INSEE.
Or above 7%.
Prime Minister Elisabeth Borne also confirmed this Thursday the extension of the tariff shield.
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This surge in prices has a strong impact on the purchasing power of households.
According to INSEE, it should fall by an average of 0.6% over the whole of 2022. But the fall could be even more brutal without "the purchasing power package" in preparation for the government.
“The purchasing power of households, that is to say the difference between their income and prices, fell by 1.8% in the first quarter, observes the INSEE expert.
Over the next six months, on the other hand, with new additional measures, it could recover.
Even if it is advisable to remain cautious, because the precise modalities are, to this day, still not known.
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The amount of debt is worrying
What measures are we talking about?
From a new expected revaluation of the minimum wage and the booklet A, first of all.
But also, on the salary side, the increase in the Macron bonus ceiling, as well as the revaluation of the civil service index point, not to mention an inflation check.
Social benefits (retirement pensions, social minima, family allowances and activity bonus) would also benefit from a boost.
Not to mention the abolition of the contribution to public broadcasting.
But nothing is played because without an absolute majority in the National Assembly, the executive will have to find a compromise with other political forces to put them in place quickly.
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Still, this support for French consumption should allow growth to hold firm.
It should be 2.3% over the year as a whole.
Certainly nothing to celebrate, compared to 2021 (+ 6.8%), but sufficient nevertheless to generate 200,000 additional jobs over the whole year.
Moreover, the unemployment rate should be reduced to 7% at the end of the year.
There remains a black spot: the astronomical amount of public debt.
In the first quarter of 2022, it exceeded the 2,000 billion euro mark.
An ominous record.