Budget. Emmanuel Macron inflates his recovery plan with helium

Self-criticism is not in its nature. When he talks about his own political action, the French President is rather self-celebrating. This is how he characterized, early September, the emergency measures adopted at the height of the pandemic: “To overcome the confinement, it was necessary to compensate employees who could no longer work, support companies that had to close, support sectors which, such as aeronautics, the automobile industry, tourism, hotels and restaurants, and culture have suffered the most. In the opinion of all observers, the French response – 470 billion euros mobilized, one of the most powerful of the developed countries – has been exemplary. “

In the same declaration, he congratulated himself on the scale of his recovery plan: “100 billion (…) will thus be injected into the economy in the coming months. This is an unprecedented amount which, compared to our national wealth, makes the French plan one of the most ambitious. “

These two statements deserve to be strongly qualified, thanks to data provided in particular by… the government itself. Reading the annex to the budget bill (PLF) for 2021, studied at this very moment in the National Assembly, is instructive. Government departments compared emergency measures taken by different countries to avoid a major economic crash a few months ago. In France, a good part of the support plan (the famous 470 billion euros mentioned by the President) is in fact made up of loans to companies guaranteed by the State (PGE), for a maximum theoretical amount of 300 billion. The rest is made up of so-called “budgetary” measures (i.e. money actually injected into the economy by the State): partial unemployment, solidarity fund, support measures for exceptional hospitals, purchase masks, etc.

Government departments compared measures taken in 7 major countries around the world. If we only look at the amount of loans guaranteed by the State, France only comes in fourth place, with just under 15 points of GDP *, very far behind Italy or Japan ( approximately 28 and 27 points). When we look only at budgetary measures, the comparison is even fiercer: France falls back to sixth place (around 2.5 points of GDP injected), behind Japan (10 points!), The United States , the United Kingdom, Italy and Spain.

The OFCE (institute linked to Sciences Po) has just published its economic forecasts for the year 2020-2021. In his grade, he also engages in a comparison which, indirectly, makes the President of the Republic lie. The aim here is to assess the budgetary measures contained in the emergency and recovery plans of six large countries of the world (France, United States, Great Britain, Spain, Italy, Germany). This time, France finishes dead last: with more than 8 points of GDP, Great Britain is, for example, twice better than France!

The OFCE also seeks to estimate the impact of the recovery plan on the French economy, in other words its effectiveness. The verdict is mixed. “The stimulus plan would improve GDP by 1.1% for 2021 and growth would be 7%, writes the OFCE. The budget calibration of the crisis response measures over two years covers around 30% of the cumulative losses of activity over 2020-21, a share similar to the 2009-2010 stimulus plan. In summary, the magnitude of the Elysée’s stimulus package would be roughly equivalent to that of the post-subprime crisis, but in a much more degraded economic context. “There is no question of saying that the government is doing nothing, nuance Mathieu Plane, economist at the OFCE. But to stress that he could do more … “All the measures will not have the same impact, continues the economist:” In 2021, 32 billion euros will be injected. 37% of this amount are targeted measures (strengthening of equity, sectoral aid, etc.), which will have a fairly high impact on the economy. 25% are made up of public investment. There remain 38% of untargeted measures, notably through the reduction of production taxes, which will have only a weak effect in the short term. Indeed, these tax cuts (10 billion euros, editor’s note) will benefit both companies in difficulty and companies that are doing well… ”

In the end, the year 2021 should be less catastrophic than 2020, but there is nothing to slash the champagne for all that. According to OFCE, the number of unemployed is expected to jump by 810,000 this year, to decline significantly next year. Despite everything, France could have 410,000 unemployed by the end of 2021 …

* One point of GDP is equal to 1% of GDP, that is, in the case of France, around 24 billion euros. 15 points represent approximately 360 billion euros.

Read original article here.