Economic crisis: the end of the “whatever-it-costs” in France?

Published by Elodie D. · Published on 5 November 2020 at 11h44 · Updated on 6 November 2020 at 11h49
Is Macron’s “whatever-it-costs” coming to an end? As France is unlocking 20 billion euros to face the crisis, the deputy Minister for the Budget has just announced the creation of a working group to “think about the eventual recovery of the French public finances”.

It was dreaded. The return to “normality” in the managing of the public finances. The French President has been trying to reassure French companies and households since March 2020 with a magical sentence, “whatever it costs”, to show the State is behind the French and is taking on a debt in their shoes. This Thursday November 5, Minister Delegate for Public Accounts Olivier Dussopt was here to present the fourth amending finance bill in 2020 and a sentence that says a lot.

“The government’s priority is first to respond to the epidemic crisis and its economical and social consequences, and then, to stop the end of managing scheme”. A working group is to be created soon to share propositions as part of the revision of the pluriannual trajectory as required by the High Council of Public Finances.

Coronavirus cost 186 billion euros since this past March: 100 billion lost of incomes because of the plummeted activity, and 86 billion in emergency health and economical measures. And in November, the State presents an amending finance bill for 2020 that includes an extra 20 billion euros, after almost 470 billion unlocked since March (including over 300 billion of state guarantees).

In an interview with the JDD, the Minister Delegate for Public Accounts says “We accept to massively damage our public finances but taking care this is only temporary: emergency and recovery measures are not permanent, only those of the Ségur de la Santé and lower production taxes will last”.

As a matter of fact, financial markets, specifically the IMF, are starting to wonder about the managing of the crisis of the countries, and France must have “a believable public finance trajectory over time and solid enough to remain credible on financial markets”

According to Olivier Dussopt, experts will be entrusted with the creation of alternative scenarios to control the public debt within five or ten years, depending on the growth forecast in the upcoming years and the final 2020 debt. The minister guarantees debt will be repaid over time, over several years, thanks to reforms, the growths and the control of the public expenses.

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