Covid-19 crisis in france: the day after

Macron’s government policy has evolved a lot over the past year since the covid-19 outbreak and its disastrous effects on the French economy – with an overall 8.3 GDP slump throughout the year. From hasty decisions to measures aimed at preserving a fragile but improving economy, there is still one element that has not changed much yet: French people have not recovered their freedoms.

The covid-19 crisis, that reared its ugly head in Europe in the month of March 2020, is now celebrating its birthday: we all remember that time when, for the first time in mankind’s history, lockdown measures were enacted a bit everywhere around the globe, in a climate of intense fear due to the outbreak of a new unknown virus which was yet more or less endemic to China at that moment.

Since then, the virus has been studied by many scientists and the knowledge about it has considerably improved, as bespeak the `creation of new «vaccines». European governments’ measures gradually took into account these advances, and France did not escape the rule.

At the very beginning of the covid-19 crisis, the French government was overwhelmed and - like other European countries - took drastic measures that resulted, for the first quarter of the year 2020, in its Gross Domestic Product (GDP) shrinking by 5.9 % from January

to March 2020. These first measures to combat Covid-19, which were enacted in March 2020, consisted among others in the mandatory home lockdown until the 11th of May and other strict general restrictions aimed at limiting the spread of the virus, such as the closure of all shops and trades, resulting in a brutal stop in economic activity and long-term damages to the economy. The second quarter was, therefore, worse, its GDP falling to 13.5 %, from April to June. The third quarter (July to September 2020) saw, on the contrary, a spectacular rise of 18.5 % in GDP, with the relaxation of measures after the fall of cases and deaths due to Covid-19 in the country. It was the time when consumer confidence bounced back and when cinemas, pubs, restaurants, theatres and gyms reopened a bit after everyone did. But the second national lockdown destroyed these hopes and the GDP fell again by another 1.4 % from October to December 2020, “helped” by governmental measures aiming at taking more into account the economy in their policy. During this period, the economy has bounced back but it remains fragile: people remain still reluctant to invest in a better off economy as household consumption slumped 5.4 percent (vs 18.1 percent in quarter three), fixed investment only grew 1.1 percent (vs 24.1 percent in quarter three) while public spending also fell 0.3 percent (vs 14.6 percent in quarter three).

Overall, according to estimations by the national statistics bureau INSEE, French GDP slumped 8.3 percent in 2020. Some sectors have not been affected by the crisis the same way: the chemical and construction industries, for example, operated at normal levels but others have yet to recover from their Covid plunge: this is the case for the aeronautics industry, which has been affected by travel restrictions throughout the year. Cinemas, restaurants, pubs, theatres or gyms have not reopened yet since the beginning of the second lockdown (end of October 2020), not to mention ski resorts or nightclubs which are facing big financial difficulties, for those which have not gone bankrupt. No announcement by the government has been made to improve these lives, and some people, who have grown impatient, have decided not to respect the Law anymore: this is the case of the restaurateur Stéphane Turillon who called people who share the same profession to open their restaurants: « I have nothing to lose right now, he said during a support event that gathered around 500 people. But he finally renounced his project, being threatened by financial sanctions, the closure of his restaurant and a jail sentence. His losses amount to 400 000 euros.

Predictions for the future are rather optimistic yet: for François Villeroy de Galhau, Governor of the Bank of France, growth in the country will reach at least five percent in 2021, while Finance Minister Bruno Le Maire said the French economy should quickly recover once curbs to limit the spread of coronavirus are lifted. For the moment, there is still a national curfew at 6 pm which is implemented and no one really knows when the restrictions will be completely lifted.

Yvan Barbeau

Sources : French Economy To Rebound With 5% Growth: Central Bank | Barron's Covid-19 pandemic pushes French economy into deep recession (france24.com) France’s Economy Contracts Slightly More Than Estimated in 4Q | Hellenic Shipping News Worldwide French economy should recover quickly once COVID curbs ease -Le Maire | Reuters France GDP Growth Rate | 1949-2020 Data | 2021-2023 Forecast | Calendar | Historical (tradingeconomics.com) Économie : quels sont les secteurs qui se portent bien et ceux en difficulté ? - YouTube Après six mois de crise sanitaire, quelle est l’état de l'économie française ? - YouTube Comprendre la crise économique liée au COVID-19 - YouTube Covid-19 en France : la reprise économique menacée - YouTube