How could people sleep for a hundred years and then carry on as if nothing had happened? Wouldn’t they be hungry? Old? Dead? Desperate for the loo?
Well, we are all in Sleeping Beauty’s castle now. For how long can you place the economy of a wealthy and complex society like France into an artificial coma and expect businesses and jobs and investment to recover overnight – or recover at all?
The original version of Sleeping Beauty was written in French by Charles Perrault in the 17th century: “La Belle au bois dormant” – the Beauty in the sleeping forest.
On Monday, Emmanuel Macron will address the nation on TV for the fourth time in less than a month. Will he play the Prince Charming who wakes La Belle France after a month of confinement? No, he won’t.
The death tolls are still at the forefront of the debate for the moment. Photo: AFP
It is clear that the French lockdown will continue at least until early May and quite possibly longer. With most other western economies also placed into “sleep mode” for the foreseable future, politicians, business people and economists are growing increasingly anxious about the permanent economic and social havoc likely to be wreaked by Covid-19.
For now the daily harvest of deaths announced by the French and other government is, rightly, still in the forefront of public concern. It is becoming clear, however, that there will also be a lengthy price to pay for the great majority who survive – on jobs, on incomes, on national debt, on investment and, possibly, on the nature of politics itself.
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The French finance minister, Bruno Le Maire, warned the other day that – even if the lockdown is lifted soon – France is likely to suffer its worst recession since 1945 when the country was devastated by war.
Almost 6,000,000 workers – one in five of all employees, more than one third of the private sector – have joined the government’s generous emergency unemployment scheme (funding 84 percent of net salaries).
This is now costing the French state €20 billion a month, destroying any hopes of balancing the country’s finances for a decade or more.
France's finance minister Bruno Le Maire. Photo: AFP
The Banque de France says the first two weeks lockdown in March reduced French economy activity by one third. The French economic tank OFCE, estimates that each month of “confinement” reduces France’s annual GDP by 2.6 percent – or wipes €60 billion off national wealth.
Xavier Ragot, the president of OFCE, says: “It’s a shock beyond anything we have ever known.”
A group of 100 or so small French businesses signed an open letter in the business newspaper La Tribune on Thursday calling on the government to take the risk of reopening large parts of the economy before it is too late.
“It’s time for courage and time for the truth,” they wrote. “When economic activity slows to this point…the risk is that the boat capsizes… An economy which can no longer move is in mortal danger.”
But President Macron faces an impossible choice.
If he does lift the restrictions on work and movement too early, France could be plunged into a second wave of Covid-19 infections and deaths. Quite apart from the cost in lives, the long-term consequences for the economy could be even more calamitous.
Of all the developed countries, France has put together the most generous short-term package of economic aid to individuals and to business.
Apart from the emergency unemployment scheme, there is a €300 billion programme of state-backed loans for big companies and direct grants of €2,000 a month, now rising to €5,000 a month for small businesses and the self-employed.
While Britain scrambled to catch up and while the United States made a big fuss about doing very little, France took the view that its own future depended on keeping businesses and households on economic life support until the crisis passed.
The country could then recover quickly. Wealth creation would collapse but bounce straight back – a “V-shaped recovery”.
But this was based on the belief, or hope, that the crisis would be short; that new tests would arrive which would reveal which of us is immune (after contracting a mild version of the disease) and could return to work.
These tests are proving complex and slow. They may not be available until the end of May or even June.
Can the French economy – can all our economies – survive a lockdown for three months or four?
Empty streets and closed businesses are the norm in France now. Photo: AFP
Macron has promised (a hostage to fortune) that no French business will be allowed to fail. This this will be impossible to guarantee if much commercial activity remains banned or restricted for a prolonged period.
Will every shop, every small building firm, every restaurant, every bar and café survive? Business groups and economists say that is impossible. The compound effect of a three months lockdown will, they say, be more devastating than a one-month lockdown times three.
The economist Julien Marcilly says that the best that France can now expect is a “massive economic shock” in the third quarter (April to June), followed by a recovery from a low base in the third quarter (July to September).
The great unknown is whether the economy will return to something like normal or remain crippled in the fourth quarter – long after the lockdown ends.
All of these questions – as well as the more pressing issue of the capacity of the health system to cope – will be in Macron’s mind before he addresses the nation again on Monday evening. The curve of new infections and admissions to hospital and intensive care is flattening but not yet turning downwards.
How the President would love to play the Prince Charming and kiss the French economy awake – at least partially. His own chances of re-election in 2022 could be destroyed by a prolonged recession and – France being France – a period of recrimination and social unrest in 2021.
All the signs are, nonetheless, that Macron will once again (and rightly) place lives ahead of jobs, including potentially his own.
He may offer some form of hope, or signpost, for when the emergency measures will end. But he will extend the lockdown for at least another 15 days to April 30th.