The French economy is set to contract 11 percent this year due to the coronavirus crisis and more hard days lie ahead until things bounce back next year, French Minister of Economy and Finance Bruno Le Maire said yesterday.
France imposed one of the Europe’s strictest lockdowns in mid-March and only began removing restrictions on May 11.
“We were hard hit by the virus, we took effective measures to protect French people’s health, but the economy practically ground to a halt for three months,” Le Maire told RTL radio. “We’re going to pay for it with growth.
A budget update being prepared would forecast a contraction of 11 percent versus the 8 percent forecast previously, he said.
“There is no question of us raising taxes,” he said. “Yes, debt will have to be paid back, but not by raising taxes, by raising growth.”
With about 300,000 cafes, bars and restaurants reopening yesterday, Le Maire said that they would continue to benefit from handouts from a government solidarity fund until the end of the year to help cover fixed costs, while the government would only gradually phase out its furlough program.
“Even if it is hard to hear on a day when the sun is shining and the cafes are reopening, the hardest part is still ahead of us in social and economic terms,” Le Maire said. “The shock of the crisis was extremely violent in France.”
The government is trying to avert a string of retail bankruptcies by seeking buyers for big clothing chains Camaieu, Conforama and La Halle, which employ thousands of people, he said.
He said measures for the aerospace industry were being prepared for next week and would be followed by those for the start-up and building sectors, while in September, he would present another stimulus plan that would cut high taxes that firms pay based on production.
Additional reporting by Bloomberg
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