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Coronavirus : the shock of the crisis is expected to cost 22 points of GDP in France in 2020

The crisis "has led to a deterioration in the public finances without precedent since the Second world War", according to the Finance Commission of the nation

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Coronavirus : the shock of the crisis is expected to cost 22 points of GDP in France in 2020

The crisis "has led to a deterioration in the public finances without precedent since the Second world War", according to the Finance Commission of the national Assembly.

After the health crisis, the economic crisis. At a time when France monitored as the milk on the fire the risk of a second wave of Covid-19, a report lists the invoice already salty from the first one : 22 points of GDP this year, according to a report Thursday from the Finance Committee of the national Assembly.

The shock was felt "at this stage" about 22 percentage points of GDP, with reference to the third draft of the finance law amendment that evaluates the ratio of debt to French GDP in the 120,9% or 2650 billion euros, the report said. "The current economic crisis, induced by the food-safety crisis linked to the pandemic of Covid-19, has led to a deterioration in the public finances without precedent since the Second world War", is it written in the document submitted by Laurent Saint-Martin, general rapporteur of the Budget to the Assembly.

Role "decisive" of the european central Bank

The use of the State for the emissions debt on the financial markets is expected to explode by over a third, identified by the authors, estimated to be 361,2 billion euros in total against 230,5 billion euros initially, according to the project of finance law amendment. The european central Bank, for its part, played a role "decisive", with its arsenal of measures, accommodative monetary which have helped to maintain low interest rates.

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But while the hot topic of the debt is ignited already political leaders and economists even before the coronavirus, such a debt level is sustainable? "There is no determined level and the unique ratio characteristic of a situation of unsustainability," noted the authors, who have interviewed several economists of different edges.

Question of the "ring-fencing" of the debt

They caution, however, against the degradation of the image of France with its creditors, and the weakening of the growth. The situation "should lead to question ourselves with a new perspective on the sustainability of this situation", say the authors.

as the crisis is not over and that recovery plans "should not be funded by a significant rise in compulsory levies". On this point, the document underlines the dangers of the austerity policies that have cost to Europe of valuable points of growth following the sovereign debt crisis.

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hence, the emergence of the issue of "ring-fencing" of the debt, is also addressed in the report, while Prime minister Jean Castex said on Wednesday that the debt after the crisis would be the subject of a separate treatment with a refund spread out over the long term via a dedicated resource. The idea of a debt shared is also addressed, on the model of the european project of 750 billion euros, including the negotiations between the leaders promise to be fierce in Brussels on Friday.

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