Impact on activity
According to several economists, a one-month lock-in, with a level of restrictions largely similar to that observed in November, will cut gross domestic product (GDP) by about one point, or just over 20 billion euros, during the year.
Knowing that curfews already penalize activity, “the first quarter will definitely be a recession quarter”, argues Ludovic Subran, chief economist for insurance company Allianz.
According to the Ministry of Finance, containment can lead to a monthly loss of activity from 10 to 18% compared to the level before the crisis. In November, activity had fallen by 12% from the level at the end of 2019 and in April, by more than 30%.
Economy Minister Bruno Le Maire also acknowledged on Wednesday that in the event of new restrictive measures, “we will of course have a growth that could not reach 6% in 2021”, as currently anticipated by the government.
New expenses and lost income
Currently, with the curfew at 18.00, “the aid costs the state about 6 to 7 billion euros per month”, which must be added to the loss of tax revenue, which leads to more than 10 billion euros, according to the LREM deputy. and Chief Budget Officer of the Assembly Laurent Saint-Martin.
“In a nutshell, if we are in the format from November last year, it will probably cost even more. It could approach 15 billion euros of all expenditure and non-resources combined,” he said.
The three most important aids
The three most important support measures implemented by the government are the solidarity fund for companies, support for short-term work and exemption from taxes.
For the month of November, for example, the government spent more than 4 billion euros under the solidarity fund, and the supplement may increase further because the companies have until 31 January to submit the request.
Partial unemployment hit 3.1 million employees in November for an amount of 2.3 billion euros, according to figures from Dares.
To this can be added possible additional assistance to support the sectors that are still very much affected by the crisis. Bruno Le Maire thus spoke in the Senate on Wednesday about the possibility of converting certain loans guaranteed by the state into subsidies, if Brussels gives the green light.
How the state will finance this assistance
The government has been “far-sighted” in 2020, Bruno Le Maire has repeatedly said. In fact, of the budget planned to finance aid, 28.8 billion euros were not spent last year. This envelope is therefore available this year, even though around NOK 9 billion has already been offered in advance to finance the support that has been granted for 2020, but which has not yet been paid.
Last week, the Minister had indicated that the government in a constant health situation could “endure for three and a half months” without having to replenish the 2021 budget.
However, in case of re-containment, it will be necessary to go through a corrective financial account. It can occur “probably at the end of the first quarter, in late March-early April, but it can be accelerated according to needs,” according to Laurent Saint-Martin.