Friday , December 4 2020

If there is a complete lockdown, is the French economy really at risk of collapse?

Concern is increasing. While Emmanuel Macron will make a speech this Wednesday, October 28 at 8 p.m., to announce new measures intended to halt the spike in the Covid-19 epidemic in France, the containment options are not emerging. more taboo. And some warn against the economic consequences: “If we completely limit back like we did in March, instead of the -10% of the recession we are betting on, it’s an economic collapse”, rebelled Medef president Geoffroy Roux de Bézieux. On the side of the Confederation of Small and Medium-Sized Enterprises (CPME), there is also talk of a “collapse of the French economy”.

True or false ? Two economists, Anne-Sophie Alsif, chief economist at the Bureau of Economic Information and Forecasts (BIPE, a consulting firm), also members of the BSI Economics think tank, and Mathieu Plane of the French Observatory of Economic Conjunctures (OFCE), answer us.

The consequences of detention will be catastrophic

RIGHT. “During the first wave, the confinement was a disaster for the economy, estimates Matthieu Plane. We lose 2 billion euros per day of economic activity. That’s 60 billion in a month! This time, if it was a complete lockdown, like in March, it would be catastrophic! Because companies, and especially very small and medium sized companies, are much more fragile than in the spring. They have amassed 50 billion euros in losses and have largely not regained their pre-crisis levels of activity. “Their debt ratio is also very high,” he continued. It will be very painful. “But from there saying that everything risks collapsing …” Talking of an economic collapse remains exaggerated, angering Anne-Sophie Alsif. Because it is highly likely that State support measures, such as partial unemployment or fee waivers, will continue. According to him, the lockdown in November will also save – economically – year-end celebrations. “For retail trade alone, December represents between 20% and 30% of annual turnover,” he said. If there is a noticeable increase in consumption in December, it is worth it. “

Employment will be affected in all sectors

FAUX. Unlike the first lockdown, the manufacturing sector will be less affected, as raw materials from China will not be blocked. “This is important, because in the manufacturing sector, once jobs are cut, it will be more difficult to recreate them,” explained Anne-Sophie Alsif. In services, as in the hotel and catering industry, jobs are rebuilt more quickly. However, the VSE and UKM situations are very critical. “Very small businesses got very little oxygen in the spring thanks to a loan that was guaranteed by the State (PGE), he recalls. But this cash, which they often don’t fully use, will not be sufficient to cover the needs of a second recycle. While households can no longer consume, they will be injected by the throat. According to him, there is no doubt: the lockdown will cause the end of the year and early 2021 to cascade bankruptcy. With thousands of new unemployed.

The state has to put more hands in the wallet

RIGHT. “Certainly, Mathieu Plane is off. Now, to avoid escalating bankruptcies, the State must bear the fixed costs of companies that are too indebted to pay them: rent, costs of machinery, equipment, transport vehicles, etc.” Bercy, it has not been decided. To limit the number of these new checks, there is a solution. While amendments to the financial bill 4 are already on the agenda to complete the solidarity fund envelope, the 100 billion euro redistribution of the recovery plan can be examined. “If necessary to finance short-term work immediately, the government could, for example, delay cutting production tax, “notes Anne-Sophie Alsif.

Public debt is no longer sustainable

FAUX. “His account is already in red…, sorry for Anne-Sophie Alsif. With a debt of 115 points of GDP, if we go up to 120% or 130%, that won’t change the situation. “Especially if we compare ourselves with our neighbors in Italy, whose debt is nearly 160 points of GDP. “However, the rebound will occur in 2021 and even more in 2022”, he hoped. Beware, however, that “magic money is limited, Mathieu Plane worries. If the State supports the company’s losses, it will eventually have to pay back the debt. And there’s no miracle: it’s up to the household to do it. “

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