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AB 2000 studies

Alain Boublil Blog


French economy : the misleading figures

The publication of an upward revision of the French GDP during 2021 2nd quarter, from 0.9% to 1.1%, the confirmation of the 2021 growth forecasts between 5 and 6% as the coming back to the pre-Covid-19 crisis level of the jobseekers having no activity level has been welcomed with satisfaction and has been accompanied with definitely optimistic comments. It has been the same with the polls results about an improvement of business climate in several activities. But it is excessive because these data are based on figures largely influenced by “basic effects”. When you measure an evolution against an abnormally low starting point, it is not surprising you find a strong increase but it would not be considered that this one is significant and even less durable.

The French economy was in a near-stagnation situation in 2019 after a strong first quarter. The sanitary crisis has sent it in an unprecedented recession. The GDP fell by 5.8% and 13.5% during the two 2020 first quarters. It has known a spectacular rebound (+18%) after the lift of the main restrictive measures during the 3rd quarter but during the three following ones, it fell back again in a near stagnation with a 1% fall during the last 2020 quarter, a zero growth during the 2021 1st quarter and a 1.1% growth during the second one. So France is far from having recovered the activity level reached at the eve of the sanitary crisis.

The measures dedicated to the support of the economy put in place by the government have generated a very important increase of the 2020 and 2021 budget deficits. That year, it would again overpass 9% of the GDP, with a rise of the public indebtedness ratio which would reach 120% of the GDP at the end of the year. That has allowed France, like other countries, to avoiding the worst, i.e. a bankruptcies wave and a huge unemployment increase. The number of jobseekers having no activity was about 3.5 million in July. It is a real improvement compared to July 2020 when it reached 3.95 million but it is just the coming back to the situation which prevailed from 2017 to 2019, then considered as a quite excessive level. The objective to make the unemployment rate falling around 7%, which had been adopted during the previous mandate, had not been reached and the current figures show that no improvement has been registered since.

So these results, despite a satisfying appearance, are disappointing when the French economy has profited from supporting measures, which have allowed to avoiding the worst, but also from the French and European rebound Plans with an amount superior to 100 billion euro and whose effects on the economic activity until now are not seen. Everything has happened as if economic agents, household as enterprises, few convinced by the prospects of the return to growth and of an improvement of the employment situation, have cashed the supports granted by the State to go through the crisis, but have well avoided to spending them. In particular, to the exception of the constrained expenditures as energy or rents, the goods consumption, after having fallen in 2020 by 8.4% has again diminished by 4% since the beginning of the year.

The household financial saving rate has jumped: it rose during few months from 4% of the available revenue to more than 11%, which has generated an unprecedented bank deposits increase and a pursuit of the subscriptions into saving and life insurance plans. Real estate acquisitions have been important due to the very low interest rates level, which has generated and increase of the loans flow, but that has mainly concerned existing properties, the level of housing starts and especially of authorized housing permits having remained at a level, notably inferior to the one observed in 2019. If we set aside the catching up phenomenon on the housing permits deliveries, after the delays generated by the lockdowns, the increase of the number of new works is much more modest.

Enterprises investments are quite also disappointing and that, despite the rebound Plan, which seems to take a long time to produce its effects. It is especially the case in the industry, where, after the very strong rebound during the 2020 3rd quarter, we observe stagnation during the last three quarters, despite the efforts done by the State to cause the rebound and to facilitate re-localization projects. When it is usually included between 75 and 80%, the enterprises self-financing rate has over passed 100% since the beginning of the year. As household, they cashed the public subsidies but have waited for that the global economic situation improves to launch eventual investments projects.

At last, and it is the only point where figures are not misleading, French foreign trades have not ceased to degrade themselves since the beginning of the sanitary crisis and that, despite the household consumption fall, which is traditionally and frequently wrongly considered as the responsible of these deficits. The contribution of foreign exchanges to growth has been negative since the beginning of the year (-0.4% and -0.2% for 1st and 2nd quarters). The deficit which was already 58 billion euro in 2019 has increased to 67.4 billion during the last four quarters, mainly due to manufactured goods. Contrary to what we frequently hear, the most important zones of the deficit are the European Union, with 13.4 billion, when exchanges were balanced in 2000, and Asia with 10 billion.

The economic consequences of the sanitary crisis must not mask the structural problems the French economy is confronted with. An always weak growth (without catching up effects), an unemployment which has not fallen for five years and an enterprises competitiveness which is not ceasing to weaken, despite the structural supports they have profited with taxes and social charges reductions and the huge aids received to allowing them to as well as possible cope with the consequences of the pandemic. The publication of figures which look satisfying because calculated with favorable basic effects must not occult reality.

If the measures put in place to allow enterprises and employees to go through the crisis have effectively been efficient and crown with success, the conclusions that all the problems French economy is confronted with have been solved, must not be drawn. To the opposite, they have been worsened as is testifying the prospect of a weak growth, the persistence of a very high unemployment and the continuous degradation of our foreign exchanges. So, the France economic recovery will have to constitute one of the major stakes of the coming presidential election.

as long as the shock between the candidates different personalities in the media will be more considered than the essential debates and if their programs limit themselves to announcement effects with long term horizons, to generalities or to seducing proposals but whose put into practice will necessarily be confronted to insurmountable obstacles, it must not be surprising if electors are lowly motivated to go to vote. Then we will not talk anymore about an economic crisis but about a political crisis.


  1. Hugo 09/07/2021 10:38 a.m. #

    Merci, un point très éclairant sur la situation actuelle. Au moins, on ne se fera pas d'illusions...

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