This Year, Next Year: France Mid-Year Forecast Report

GroupM France

Overview

The pandemic we are experiencing has impacted the entire globe. However, some countries have had to suffer more severely from this health crisis, particularly in Western Europe. France has not been exempt, and is even one of the countries most severely affected by the spread of the virus. Although the highest level of this crisis is now behind us, the total and unrestricted de-confinement of the country is still ahead of us.

The government has, as in other countries, acted in a progressive and adaptive manner to limit the effects. Even if, in the end, some choices and trade-offs might have been different, the overall result is a management in line with the evolution of knowledge about the pandemic. Moreover, most of the measures taken have been in line with those taken by other countries.

From an economic point of view, the scale of the tsunami that is about to hit seems to become clearer. Although the economy has been trying to make a smooth recovery in recent weeks, the outlook for activity is worsening. GDP is likely to show a vertiginous drop, according to the OECD which forecasts an 11% decline in its June release, much worse than prior expectations.

This is an historic decline, and only the fourth year since 1950 to experience a recession, but in a much more measured way for the previous ones.

A collapse in spite of the multiple measures and recovery plans announced by the government to support sectors (Tourism, Automotive, Aeronautics, etc.). As a direct consequence, the unemployment rate should exceed the symbolic level of 10% (this compares with 8.1% before the crisis).

Finally, and unsurprisingly in view of the effort made by the authorities, public debt will worsen considerably. Thus the state budget deficit should reach 200 billion Euros (Government source), delaying any possible return to balance within 5 years.

 

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