The engines of growth have been extinguished one after the other since the appearance of Covid-19 in France. Economists are already predicting a severe recession for the year 2020. This will have a heavy impact on public finances.
The coronavirus pandemic does not only have appalling health consequences. It is already having economic repercussions of rare power. Bruno Le Maire no longer hesitates to compare the 2020 crisis to that of 1929, synonymous with recession and mass unemployment. We have selected ten figures which symbolize the cold snap of the French economy.
1) Private sector activity collapses
Private sector activity, measured monthly by Markit’s Flash Composite index, fell to 30,2 in march in France, compared to 51.2 in February. As a reminder, an index greater than 50 indicates an expansion, an index lower than this limit indicates a contraction.
The Markit firm stresses that the decline in activity has been particularly strong for service providers, with the lowest figures since the start of this statistical series in 1998. For the manufacturing sector, the decline in activity is the most strong since March 2009. At present, French industry is only running “at 25% of its capacity”, according to estimates by Bruno Le Maire.
2) Drastic drop in electricity consumption
The demand for electricity is one of the main thermometers of activity in the country. However, consumption has fallen by 15% last week, according to data from the Electricity Transmission Network (RTE). An unprecedented situation that plunges wholesale market prices and could weaken certain electricity and gas suppliers in Europe.
However, RTE ensures that there is enough electricity produced to meet consumption and that the power lines are sufficient to transport electricity everywhere in France and even in Europe.
3) The tonnage of waste is reduced
Another reflection of human activity, the household waste collected in Paris and in 84 municipalities of the inner suburbs saw their tonnage contract by 25% for several days, according to the metropolitan waste agency (Syctom).
This drop can be explained in particular by the closing of bars and restaurants, the cessation of business activities and the departure of part of the population to other regions. In most of these municipalities, garbage collectors continue to collect at the usual rates and times. That said, four out of five sorting centers have been closed (the 6th being under construction), for employee safety reasons.
4) Public transport almost at a standstill
At least there is room to sit. Public transport has been almost empty in large cities for ten days. Citymapper, the number 1 application for urban travel and route planning, has created an index to measure the impact of the coronavirus on travel. In Paris and Lyon, only 5% of its users use it compared to an ordinary day.
5) traffic jams in Ile-de-France are evaporating
Normally, 14.8 million car trips are made every day in Ile-de-France. This does not fail to create traffic jams in the capital and on the main traffic axes. But, for eight days, the traffic has become extraordinarily fluid.
During peak hours, the Sytadin site records zero kilometer plug. The spectacular drop in car traffic also contributes to air purification in the most populous region of France, according to AirParif data.
6) the sky is empty
Air France-KLM has entered hibernation mode. The Franco-Dutch group has reduces its flight capabilities by approximately 90%. This unprecedented decline is accompanied by the immobilization of the A380 fleet for Air France and the Boeing 747 for KLM, as well as the partial unemployment of a large number of employees.
The entire sector is affected. The International Air Transport Association (IATA) figures the expected loss of turnover in 2020 at 252 billion dollars, against 113 billion dollars a fortnight ago.
7) Post offices are idling
Symbol of the continuity of public service, La Poste will downsize to protect its employees. From March 30, letter carriers will pass three days worked out of seven. This reduction in working time will be “without impact on remuneration”, specifies the company. In total, 2,000 post offices remain open out of 7,700.
8) work stoppages explode
While many companies have lowered the curtain, short-time working has exploded in a few days: it affects at least 730,000 people. The government seeks to save jobs during the temporary downturn in activity, and thus promote recovery later. He released an envelope of 8.5 billion euros for two months for the compensation of employees, but admits that the sum could be insufficient.
9) Growth is entering negative territory
Bruno Le Maire puts it bluntly: the 2020 crisis is comparable to that of 1929. Because French growth is about to experience a violent halt. In its amending finance bill, passed less than a week ago, the government still forecast a growth of -1% this year. However, UBS bank is now counting on a 4.3% drop in GDP. An estimate that could increase depending on the evolution of the health situation.
10) The public deficit ready to skid
At the start of the year, the government expected a public deficit of 2.2% in 2020. A figure revised upwards to 3.9% last week. But that scenario is expected to be shattered with the recessive effects of the coronavirus.
According to the estimates of Albéric de Mongolfier (LR), rapporteur for the Budget in the Senate, the deficit could reach 6.3% at the end of the year if the GDP contacts about 5%. Under these conditions, the risk of a debt surge is more than probable. With the current scenario of the executive alone, considered optimistic, the debt could represent 102.5% of GDP at the end of 2020, according to the calculations of Senator LR.
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