Can the French economy survive a second lockdown? Shops, events, culture, transport, travel … For these sectors, act two of confinement, even more moderate and adapted to work, could be “fatal”. A month of confinement costs “between 50 and 75 billion euros” and nearly 3 points of GDP to the economy, in addition to stimulus measures which will be multiplied by the State. Pending the positioning of the ECB during the day, the Paris Stock Exchange opened almost stable, after its plunge the day before.
Can the French economy survive a second lockdown?
“Considerable economic and human damage”. This is the warning sent Wednesday evening by the president of Medef Geoffroy Roux de Bézieux, after Emmanuel Macron’s speech introducing this measure from Friday until December 1. “It is not in the shops that contamination takes place but in the private sphere,” said the representative of the employers, defending the “penalized” traders.
While the executive has drawn the lines of a reconfinement that does not prevent going to work, entire sectors of the economy (shops, events, culture, transport, travel in particular) will be directly affected. Already, several French regions have seen the increase in social plans, on a trend of acceleration of the country’s deindustrialisation.
Many SMEs, subcontractors and freelancers are already suffering the damage linked to the closures of large sites without really any possibility of bouncing back in the short term. With them, it is the scenario of the expected recovery that darkens. This second confinement will necessarily weaken the U, V, W, K or bird wing curves.
In addition to the 100 billion promised by the “France Relance” plan linked to the first confinement, public finances will also have to cushion a slowdown in trade and tax revenues. A loss to be expected “between 50 and 75 billion euros of gross domestic product”, estimates the Medef. Each month, France would also lose between 2 and 2.5 points on its GDP, had assessed the Minister of Public Accounts Olivier Dussopt, while confinement costs each month “10 billion euros in intervention spending” to the ‘State.
A weaker impact than in April?
Will the impact of containment be as strong as in the spring? Last April, a month spent entirely under confinement, activity fell by more than 30% in France. The impact should be a little less this time, the restrictions being less severe, with widespread teleworking as much as possible but an activity that will continue, especially in utilities, factories, farms and construction, said the President of the Republic Wednesday evening. In March-April, “we were caught off guard: we did not have masks, we were not organized, we did not have laptops for teleworking”, also judges Selin Ozyurt, economist at Euler Hermes .
This time, companies and administration are better prepared to continue part of their activity during containment, with defined health protocols. The construction sector and part of the industry should be less penalized.