Without “any cost”, public finances would have deteriorated even more

The measures put in place by French public authorities to protect the economy during the health crisis were certainly costly, but their absence would have been even worse, according to a study.

As a matter of fact: theno matter what“Alleged by Emmanuel Macron it has cost France dearly, very dearly, too. The battery of measures put in place by the authorities to keep the economy at bay during the health crisis has weighed on public finances for a long time. But without these measures – solidarity funds, partial assets, state-guaranteed loans, just to name the best known – the situation would have been worse, according to a study. They would therefore have been a necessary evil to avoid an even more terrible catastrophe.

Published Tuesday, the report by the Institute for Public Policy and the Center for Economic Research and its Applications (Cepremap) traces the macroeconomic aspect of the health crisis and specifically simulates how French business would have evolved in the absence of a strong state response to the economic consequences of the epidemic. France has been particularly resilient in the face of the crisis, especially when comparing the evolution of activity with respect to the 2008 shock, economics professor François Lagot stressed during a conference.

Without government measures, “the decline in GDP at the height of the crisis would not have been 17, but 37points of GDP, noted the professor at the University of Le Mans. And, behind it, it would have taken the return of GDP to pre-crisis levels “a amore, or 5.5 quarts. The measures therefore made it possible to limit the impact of the crisis on growth, to accelerate the recovery and to strengthen activity in the medium term.

And, from a budget point of view, France would also win, according to the study: no matter how expensive it may be, the “no matter whatit made it possible to avoid an even more marked fall in GDP, which would have led to a greater increase in public debt. In a scenario without state aid, the debt-to-GDP ratio would have itenormously increased“, Briefly rising to over 140%, before stabilizing above 120%. The room for maneuver of public authorities to invest would also have been weakened. “The massive use of partial unemployment appears to have paid off and ultimately turns out to be less costly than a strategy in which the government would have decided to raise unemployment», Notes the IPP.

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Satisfaction of the majority

Despite the sharp deterioration in public finances, the current situation would therefore be more appreciable than that which would have resulted from the absence of massive public spending at the heart of the crisis. The aid allowed for a rapid rebound in activity, which surprised analysts. Some forecasts published last year predicted a much slower return to normal: in June 2020 the Banque de France expected a stabilization of the debt “at a level close to 120% in the period 2020-2022“, And to significant job cuts in 2020 and 2021. Fortunately, the reality has been more lenient. However, this debt will take decades to pay off.

During the presentation of the IPP study, several invited elected officials welcomed the conclusions of the analysis. “I believe that the emergency aid has been well balanced […]. They helped avert economic collapse“, Commented the deputy (former LREM, New Democrats) Émilie Cariou. “It is quite impressive to think that these emergency expenses were investment expenses. […] It would have been worse. […] It would have been more expensive“, Observed his counterpart (LR) Éric Woerth. “This is not how we will detoxify ourselves from public spending“, Then the elected representative of the Bourbon palace faded. “The debt would have widened further had the measures not been taken“Added centrist (Modem) Jean-Noël Barrot.

On Wednesday morning on Radio Sud, the Bercy boss was satisfied with the analysis of the IPP. “If we had not spent public money to protect employees and avoid bankruptcies, the French public debt today would not be 115%, but ten points higher, 126%.“. “It is cheaper to protect than to repair later“, Added Bruno Le Maire, considering that the study validated the political choices of the majority during the crisis.


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