The Limited Times

Now you can see non-English news...

Without the "whatever the cost", public finances would have deteriorated even more

2021-11-17T15:57:51.398Z


The measures deployed by the French public authorities to protect the economy during the health crisis were certainly expensive, but their absence would have been even worse, according to a study.


It is a fact: the "

whatever it costs

" assumed by Emmanuel Macron has cost France dear, very dear, even.

The battery of measures deployed by the authorities to bring the economy at arm's length during the health crisis severely strained public accounts for a long time.

But without these measures - solidarity funds, partial activity, state-guaranteed loans, to name only the best-known - the situation would have been worse, according to a study.

They would therefore have been a necessary evil to avoid an even more terrible catastrophe.

To read alsoHave we really finished with "whatever the cost"?

Published Tuesday, the report from the Institute of Public Policy and the Center for Economic Research and Its Applications (Cepremap) reviews the macroeconomic aspect of the health crisis and in particular simulates the way in which the French activity would have evolved in the lack of a strong state response to the economic consequences of the epidemic. France has been particularly resilient in the face of the crisis, especially if we compare the evolution of activity compared to the shock of 2008, underlined the professor of economics François Langot, during a conference.

Without government measures, "

the fall in GDP at the height of the crisis would not have been 17, but 37

" points of GDP, noted the professor at the University of Le Mans. And, behind, the return of GDP to a pre-crisis level would have taken "

a year

" more, or 5.5 quarters. The measures have therefore made it possible to limit the impact of the crisis on growth, accelerate the recovery and strengthen activity over the medium term.

And, from a budgetary point of view, France would also be a winner, according to the study: costly as it may be, "

whatever the cost

" made it possible to avoid an even greater fall in GDP which would have implied a greater increase in the public debt.

In a scenario without state aid, the debt-to-GDP ratio would have "

increased dramatically

", briefly rising to over 140%, before stabilizing above 120%.

The public authorities' room for maneuver to invest would also have been weakened.

"

The massive use of partial unemployment seems to have paid off and is ultimately less costly than a strategy where the government has decided to allow unemployment to increase

," notes the IPP.

Most satisfied

Despite the sharp deterioration in public accounts, the current situation would therefore be more appreciable than that which would have resulted from a lack of massive government spending at the heart of the crisis. The aid allowed a rapid rebound in activity, which surprised analysts. Some forecasts published last year expected a much slower return to normal: in June 2020, the Banque de France expected debt stabilization "

at a level close to 120% over the period 2020- 2022

”, and to significant job cuts in 2020 and 2021. Fortunately, reality has been more lenient. The fact remains that this debt will take decades to be repaid.

During the presentation of the IPP study, several invited elected officials welcomed the conclusions of the analysis. “

I consider that the emergency aid has been well calibrated […]. They made it possible to avoid the economic crash,

”commented MP (ex-LREM, New Democrats) Émilie Cariou. “

It's pretty impressive to think that these emergency expenses were capital expenses. […] It would have been worse. […] All that would have been more expensive,

”noted his counterpart (LR) Eric Woerth. “

This is not how we are going to detoxify ourselves from public spending,

” then qualified the elected official from the Palais Bourbon. "

The debt would have grown even more if the measures had not been taken

», Added the centrist (Modem) Jean-Noël Barrot.

On Sud Radio, Wednesday morning, the boss of Bercy was also satisfied with the analysis of the PPI.

"

If we had not spent public money to protect employees and avoid bankruptcy, the French public debt would not today be 115%, but ten additional points, 126%

".

"

It is cheaper to protect than to repair afterwards

", added Bruno Le Maire, considering that the study validated the political choices of the majority during the crisis.

Source: lefigaro

All news articles on 2021-11-17

You may like

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.