France revises budget for the third time to support the economy

About 45 billion to support the most vulnerable sectors while the recession looks terrible: the government presents in Council of Ministers, Wednesday, June 10, a new crisis budget.

This is the third amending finance bill (PLFR) drawn up since the start of the crisis and it corresponds to the "second phase of the response to the crisis", said Tuesday evening the Minister of Economy, Bruno Le Mayor, on RTL. "The second step is to come to the rescue of all the sectors that are most threatened," he added.

>> To read: "France, world champion of the budgetary effort against the Covid-19?"

The state of health emergency put in place at the end of March to fight against the new coronavirus could be lifted on July 10, said Tuesday evening Matignon insisting on "the evolution at this positive stage of the health situation".

After the more than 400 billion euros in emergency measures taken in the two previous budgets, this new rectified budget will increase public support to "460 billion" euros, the minister said.

The State is renewing its support for the #Book industry.

In total, since the start of the state of health emergency, more than 230 million euros have been mobilized in favor of the book industry.

With @BrunoLeMaire, we are announcing new measures ⤵️ pic.twitter.com/2PZwht1A2w

It thus includes the 18 billion euros of the aid plan for the tourism sector, one of the most affected by the containment with movement restrictions and the closure of cafes and restaurants - which is partly continuing.

It also includes the € 8 billion plan for the automobile announced at the end of May, the € 600 million for French Tech unveiled last Friday, the € 15 billion in support for the aeronautics sector and aid for the book unveiled Tuesday. In addition, measures in favor of small trade and construction, said Bercy.

Aid for the 800,000 precarious young people under 25

"The focus is on sectors which are strong markers of the French economy and which concern a lot of jobs. This sends a positive signal to support the confidence of entrepreneurs and households," said Hélène Baudchon, economist at BNP Paribas.

While bankruptcies and layoffs are looming, the government will strengthen the short-time working scheme by around 5 billion euros and will release 1 billion to widen aid to companies that hire an apprentice.

Even if in Bercy, a policy of support for "supply" is defended, this budget will also include exceptional direct aid for the 800,000 precarious young people under 25 and the poorest households.

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Finally, this budget must endorse 4.5 billion euros in state support for communities, at a time when their revenues are melting with the crisis and their expenses are increasing to cope with the epidemic.

In total, however, the additional direct budgetary expenditure will only represent 13 billion euros, the rest being cash flow measures (charge deferrals, guaranteed loans, etc.).

But the deployment of these billions of euros is criticized. Some sectors feel forgotten, such as agriculture or public transport.

Worsened economic forecasts

The environmental NGO Greenpeace regrets that alongside the 15 billion for aeronautics and 8 billion for the automobile, there is "always zero for the revival of the railway", which emits fewer greenhouse gases.

In addition to these aid plans, the government is forced to further worsen its economic forecasts for this year. It now expects a -11% recession, against 8% decline in GDP expected only a few weeks ago.

"We can clearly see that the situation has changed significantly in a short time (...) and this recessive shock meant that we had to take even more support measures", notes Hélène Baudchon.

The difficulties in the tourism sector alone should cut GDP by almost a point this year.

Consequence: with tax revenues that will melt by 27 billion more compared to the already declining estimate of the previous rectified budget, the deficit should further worsen to 11.4% of GDP and the public debt swell to 120, 9%, estimates the government.

On Tuesday, the Banque de France expected a fall of around 10% of French GDP this year, penalized in particular by a 9% drop in consumption, a mechanical effect of the increase in household savings, which should inflate by 100 billion euros.

With AFP

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