Covid: the French saved nearly 100 billion, the equivalent of the recovery plan

“Covid savings” already amounted to 80 billion at the end of July, according to the Banque de France and should reach 100 billion by the end of the year. AFP / JOEL SAGET

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Since March 17, the date of the start of confinement, the French have saved nearly 100 billion euros, the equivalent of the recovery plan that the government will present next Thursday. This constrained saving has come at the expense of consumption. Today, the executive would like to see it circulating again in order to support the economy.

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Thanks to the partial unemployment set up by the government during the confinement, many French people have been able to keep their remuneration and increase their savings. But due to a lack of confidence in the future, households do not seem ready to spend their woolen socks of 100 billion euros, or the equivalent of 4% of GDP.

As household savings swelled , corporate results plunged. At the end of the confinement, there was a rebound in consumption which can be explained by the acquisition of goods whose purchase had been deferred: this is the case of real estate, automobiles and its reconversion bonus, and then with the holidays, the French consumed more fuel, but this rebound did not allow any real catching up.

However, the recovery cannot be achieved without a restart of consumption by the French. So how do you get the machine going again if households remain cautious? This is the answer that must find the government which will detail next Thursday its recovery plan of 100 billion euros. A plan supposed to put the glut of savings back into the circuit.

The executive will focus its support on businesses with tax cuts but also aid for hiring and investment. Not sure that this is enough to gain the confidence of savers. France could draw inspiration from Germany, which has taken measures to encourage savings, such as lowering VAT for 6 months.

► To read also: Recovery plan of 100 billion euros: in what state is the economy in France?

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  • Coronavirus

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