A couple, one of them on their smartphone, is enjoying the view of the Eiffel Tower at sunset in Paris on February 23, 2021.
Ludovic Marin | AFP | Getty Images
France may still be in the middle of the coronavirus pandemic as the Delta variant is spreading rapidly, but officials and business leaders are looking to a period of recovery and reflecting the broader prospects for France’s political and economic future.
“The recovery is very steep, but even steeper than last year. So we are very happy with it,” said Agnès Bénassy-Quéré, chief economist at the French finance ministry, to CNBC on Sunday, pointing out that the national statistics office is raising its growth forecast for France to 6% in 2021.
“The official forecast for 2021 is still 5% because we are still cautious about autumn. As you said, there is a Delta variant and we kept some restrictions until the end of the year. So already in spring, when this forecast was made, it contained some restrictions, slight restrictions of the second half of the year. So far we haven’t changed that forecast, then we’ll see what happens when we have to do the 2022 budget, “he said, speaking with CNBC’s Charlotte Reed while attending an economic forum in Aix-en-Provence.
Of course, the Covid-19 pandemic has left a lot of devastation and no less in France, where over 5.8 million infections and over 111,000 deaths have so far been recorded, according to Johns Hopkins University.
Like other countries, France put in place emergency measures to support the economy, businesses and employment during the pandemic, and there are now some concerns that reducing that support could lead to job losses and the closure of some businesses.
Bénassy-Quéré said the government has been “very cautious” but the labor market is currently resilient.
“There is a rejuvenation, a gradual phasing out of support, the emergency aid, which comes gradually over the course of the summer. And there will still be some support, for example [the] Long-term unemployment scheme, which also applies in the fall for activities like [the] Aircraft industry where we really want to keep the skills in the industry and so there will be some retraining programs. “
However, he found that while activity in some industries was above pre-crisis levels, some lagged behind, such as tourism. In addition to the uneven recovery, another problem for the government is that France’s mountain of debt has soared to a record high due to huge borrowing. At the beginning of the year, the French statistical office Insee reported that the national debt was 115.7% of GDP at the end of 2020, compared to 97.6% in 2019.
How France will pay off this mountain of debt is uncertain for now, as the government under President Emmanuel Macron will raise taxes just 10 months before the presidential elections. Whether Macron will undertake ambitious (and unpopular) reforms to modernize and simplify France’s sluggish pension system is also uncertain, given the pandemic situation.
So far, two rounds of regional elections in the last few weeks have dispelled expectations that the far-right National Rally – formerly known as the Front National – could do well in the national vote next year after a poor showing in the regions. Turnout was low on both rounds, leading some analysts to express concern about the level of voter dissatisfaction in France.
Valérie Rabault, President of the Socialist Group in the National Assembly, who also attended the Economic Assembly in Aix-en-Provence, told CNBC on Sunday that “French society has broken”, as evidenced by the low turnout in regional votes.
“We had local elections and less than 35% of the people voted, so that’s very low. This was the first time in France that so few people vote in local elections. For me it reflects … a kind of indifference on the part of the population to build a common project for France, for society, and that is the great challenge for us as politicians to be able to and have to tackle this issue [a] more positive message after the crisis, “she said, adding,” We have to define something, a common project that can unite people. “
Structural problems
Business leaders who attended the Aix-en-Provence Economic Forum told CNBC that there were structural problems in France that would not be easy to fix.
“The rifts that existed in French society are still there, be it the territorial divide, the generational divide and the very low percentage of voters as we saw in the last elections,” Pierre-André de Chalendar, Chairman of French building materials group Saint-Gobain, said CNBC on Saturday.
“The priorities are clear, (they are) the energy transition, reindustrialization – which is the best way to overcome this territorial gap – and to place more emphasis on the youth, on education. The question is how do we do it, and I think the problem in France is that the state as a whole is too big and not efficient enough. “
Ross McInnes, Chairman of Safran, agreed that “two important structural issues” should be addressed in France, the most important being the quality of education in France.
“When it comes to education, our school system has let us collectively,” he told CNBC. “Hundreds of thousands of young French people … drop out of secondary school with no good math, you know, the three ‘Rs’ of reading, writing, and arithmetic. And we urgently need to fix that in order to be able to recruit talent for good jobs. “
