The sanitary crisis has generated during the 2nd quarter a brutal stoppage of the major economies whose extent will appear with the coming publication of GDP figures related to this period. Then the States have intervened in urgency to support enterprises and employees facing unprecedented shock and to limit its consequences on employment. Forgetting the traditional message on the necessity of a balanced management of public finances, hundreds of billions of euros have been offered through different channels in France as elsewhere in Europe: guaranteed loans by the State given to enterprises to offset the turnover losses and to protect banks against defaults, reductions of charges in favor of enterprises, put in place of a very generous part-time unemployment system allowing to keep necessary know-how when the activity rebounds. But this support, by definition a temporary one, has not been enough to generate by itself an economic rebound, especially in France as the figures which are being published show it. So it was necessary to add to it a rebound plan.
The concept is not new. It was put in practice for the first time in 1933 by Roosevelt, based on the works of the British economist Keynes, to get the country out of the 1929 great crisis. Keynes had shown that market laws were not enough to reestablish the major economic equilibriums, especially regarding employment. Unemployment could durably remain. It was then the duty of the State to intervene. The economic policy concept was born. It will frequently find applications in France, with, for instance, the Jacques Chirac rebound plan decided in 1975 to cope with the first oil shock, which will be followed by the Raymond Barre austerity plan in 1978 to fight against inflation. By the same, in 2009, to overcome the financial crisis, the State will let the budget deficit increasing through a reduction of the charges weighting on enterprises. But to the difference with Germany which had priviledged supports in favor of part-time unemployment, it preferred keeping advantages in favor of extra-time working hours.This time the government has not made the same mistake and has even reinforced and extended measures regarding part-time unemployment.
This support has not been enough to start a rebound trend able to stop the high rise of unemployment forecasted for this autumn. So, the government is going to add to its support plan a rebound one and has included, like a symbol, the rebound word in the denomination of the Finance minister. But symbols are rarely enough and it is the content and the agenda of its execution which is important, especially when announced amounts, 100 billion euros, with a one-third European contribution if members-States reach an agreement. Especially, there is a lot of haziness. First precision, the plan will have to be included in the 2021 Finance bill and a lot of points cannot be used before next year. Then, is it about new expenses or reductions of State receipts? Are the announced amounts related to one year or, which reduces its significance, are they going to be split between several years? Regarding some expenses, as charges reductions or taxes reductions, are they going to be temporary or definitive? To make a judgment about the extent of this rebound plan, it will be necessary to wait for having the answers to these issues regarding both the agenda and the precise content of the announced measures.
The most commented measure is the reduction of “production taxes”. The choice of the wording is not innocent and let us believe so that industry is supported and that plants re-localization is encouraged as the reduction of the country dependence to essential supplies coming from outside. But it is an illusion. These taxes are charged on all the enterprises and the industry will only benefit of the reduction according to the low share of the country GDP it represents. As for the famous “CICE”, main benefactors will be big retailers, financial services and, which is desirable, tourism activities.
The emphasis put on environment issues is, by itself, more a communication purpose than a real one. The choice in favor of buildings thermal renovation is a constant one for years. How not to approve a policy which reduces fossil fuels imports and our greenhouse gas emissions and which is favorable to employment? But until now, proposed incentives have been poorly used for two reasons. They included a revenue ceiling. But the priority for an already highly indebted household is definitely not to invest in costly projects which carry low long-term rates of return. Especially, schemes have not been designed in taking into account the legal situation of the one who occupies the home. The owner is few disposed to making isolation works because it will be his tenant, through a reduction of his energy bill, who will profit from them. And the tenant has no interest in investing in a home he doesn’t own. Nothing in the announced rebound plan allows to be sure that the incentives system will be changed to take these realities into account. Regarding public buildings thermal renovation, it depends from local authorities which own most of the real estate. Until now, they seemed to be very lowly motivated. When we observe these thousands of town halls, in Paris as in the whole country, which are larger than the White House, we are sure that their power consumption could definitely be reduced.
Power production and truck transportation are absent in this rebound plan which has a lack of emblematic big projects which would have given to it its whole credibility, along with strengthening national industry and creating jobs. The rebound of goods transportation by rail has to be supported by a major technical innovation which would allow it to adapt itself to the now systematic use of containers to carry merchandises. What SNCF is expecting to make proposals and to ask for the State support? Necessary investments will be made easier to finance because the State is proposing its support and interest rates are nil and even negatives. What also the State is waiting for to abrogate the totally unrealistic objective to reduce the share of nuclear power production to 50%, except if it put back in activity coal-fired power plants to cope with the intermittent character of renewable? The launch of a new nuclear power plants program would allow to creating thousands of highly qualified jobs. To wait for the putting into activity of the Flamanville power plant doesn’t make any sense when we know that England has launched its own program of EPR constructions and that it has asked France to be its main supplier, and that the two power plants built in Taishan are normally operating for a year.
In order a policy gives the expected results, it is necessary it doesn’t adopt several opposite objectives. In this case, the priority, it is the growth comeback and job creations. The adopted proportioning between measures in favor of supply and the support of the demand with targeted social transfers in favor of the young and of some professions who have plaid an essential role during the crisis can lead to the restarting of the activity. It could also bring a contribution to environment objectives to the condition to make the good choices. It is on this last point that the government has a lot of wwork to accomplish.