The French economy will contract by 11% this year, warns the government

L'économie française va se contracter de 11% cette année, prévient le gouvernement

PARIS | The government has further worsened its forecast of recession for France this year, with a fall of the gross domestic product (GDP) historic -11 %, at the time the economy tries to start gently with the déconfinement.

“I have never hidden that the hard part is in front of us” because “the shock of the crisis has been extremely brutal,” said the minister of the Economy Bruno The Mayor, proclaiming Tuesday, the new forecast on the radio station RTL. “We have a huge air hole” with this crisis.

The government entérinera this new estimate of the magnitude of the recession in a new draft amending budget that must be presented at the council of ministers on 10 June.

Last week, Insee had indicated that the fall in GDP would be well above the -8 % expected by the government, because the recovery of activity since the beginning of the déconfinement will be “the best progressive in the second half”.

In the first quarter, the decline in activity has finally reached -5,3 %, but the national Institute of statistics anticipates a dip of -20 % around the second quarter.

The French economy, “seeks (…) to catch his breath,” but she “resurfaced in a world that is no longer exactly the same as before the health crisis,” was judged the national institute of statistics.

If the déconfinement began on 11 may, and the prime minister last week announced an acceleration, notably with the lifting of the travel ban to more than 100 kilometres from his home, the recovery is slow. All the stores have not yet reopened, and the restart of some companies is slowed down by persistent disturbances in the production chain.

Small thinning: Tuesday, restaurants and cafes can reopen in the departments, “green”, and only their terraces in the departments “orange”, including Paris.

This is a “very positive signal”, with 300,000 institutions that will be able to re-open and half-a-million employees who will be able to resume their activities, stressed The Mayor, even if he believes that, “for us to recover economically it will take a lot more”.

Learning, technology and aeronautics

“I have the absolute conviction that we will bounce back in 2021”, he however advanced.

After the emergency plan of more than 100 billion euros put in place since the beginning of the crisis, the government is now preparing plans for specific support for the most affected sectors.

Efforts of 18 billion euros for the tourism, of 8 billion euros for the car or € 4.5 billion for communities that have already been announced, measures for the aviation industry, the learning, the employment of the young or the young shoots in the next few days.

“We take all the measures in all sectors,” assured Bruno Le Maire, who, however, has already warned that bankruptcies and redundancies would be inevitable in spite of the public support.

Several companies in the sector of the distribution, as a Cameo, The Hall or Conforama are already in great difficulties, with thousands of jobs under threat, while the car manufacturer Renault plans to remove 15,000 jobs, of which 4 600, in France, the crisis has reinforced pre-existing vulnerabilities.

While some plead for an increase of working time in order to accelerate the recovery in the businesses, the minister has suggested that the challenge of the economy will be especially in the fight against unemployment.

“This is the challenge for France in the coming months: all work and try to contain unemployment will increase,” he said.

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