SHARE
COPY LINK

HEALTH

ANALYSIS: Will Macron’s €100,000,000,000 rescue plan be enough to save France?

If you don’t think France's €100 billion economic recovery plan sounds big, then put in all the zeroes, writes columnist John Lichfield. But will it be enough to save the country from the impact of the pandemic?

ANALYSIS: Will Macron's €100,000,000,000 rescue plan be enough to save France?
French President Emmanuel Macron. Photo: AFP.

France’s post-coronovirus economic recovery plan is immense – €100 billion over two years.

If you don’t think that sounds big, put in all the zeroes: €100,000,000,000.

That may be big but is it big enough? Is it the right plan? Can France afford it?

It is, by my calculation, five times bigger in real terms than France’s share ($2.3bn) of the Marshall Plan for post-war recovery in the 1940s.

Proportionally, it is somewhat larger than the €130 billion recovery plan announced by Germany. It is about three times bigger than the £30 billion the British Chancellor Rishi Sumak promised in early July (although another British announcement is expected this autumn). 

The French plan  – entitled “France Relance” or “Relaunching France” – aims to do two things at once.

First, it hopes to provide a powerful, short-term stimulus to prevent the French economy from floundering, or even foundering, this year and next.

An 11 percent  drop in French  GDP is feared in 2020 –  equivalent to a loss in national “earnings” of Euros 243bn  The plan aims – somewhat ambitiously – to  recover all those losses by the end of 2022.

There will be amongst other things large tax-cuts for business and the extension of some furlough programmes (to keep alive the entertainment and arts industries). There will also be €6.5 billion in tax-breaks and subsidies for hiring young job-seekers. There will be increased spending on health care, public-housing and railways.

Secondly, the plan is intended as a vast long-term investment in modernising the country’s infrastructure and industrial base to prepare for a greener and less energy-consuming future.

There is €2 billion for developing hydrogen as a “green” energy. There will be over €30 billion in tax-breaks, subsidies and cheap-loans to business to improve competitiveness, encourage innovation and fund the “re-location” of manufacturing from abroad. 

The “France Relance” logo. Photo: AFP

Where is all the money to come from?

€40 billion will come in direct grants from the €750 billion EU recovery (funded by the largest ever programme of mutualised European debt). The rest will come from increased French national borrowing. Macron has promised (read my lips) that there will be “no new taxes”.

It’s a great deal of money. Will it be enough?

Quite frankly, it’s impossible to say. This is a plan for recovery from a crisis which has not yet finished. After a lull in May June and July, coronavirus infections in France are rising rapidly again.

The government hopes to avoid another national lockdown but cannot guarantee that. Severe, new local restrictions may become necessary.

Much depends, in any case, not on spending by the government but on spending by the rest of us – the 67,000,000 residents of France. An extra €111 billion – equivalent to the relaunch programme and then a bit more – has piled up in French savings accounts since the coronovirus crisis started.

The first figure which the finance minister Bruno Le Maire checks each morning is credit and debit-card spending: in other words France’s rate of consumption. It is rising again but not very fast.

President Emmanuel Macron rejected suggestions – from trades unions and left-leaning members of his government – that a much larger chunk of the €100 billion should go on short-term stimulus measures such as cuts in VAT or increased welfare spending. By putting more money in the pockets of the poorest, the unions said, this would have ensured the money circulated quickly and “multiplied” its impact.

Macron accepted some short-term stimulus but insisted that the package must be more than just a 21st century revival of Keynesianism – debt-funded public money to keep France’s head above water. It must also further his 2017 election promise to “reform” France by reducing tax burdens on business and preparing the country’s infrastructure and industrial base for the mid and late 21st century.

In any case, he argued, there was no shortage of cash in French pockets or saving accounts. The Plan would increase “confidence” and then confidence would increase spending.

This was a calculated gamble. Macron wants to have the economy showing strong signs of recovery before the April-May 2022 presidential election. He also wants to be able to present his crisis response as more than just a splurge of debt.

French Prime Minister Jean Castex and Economy Minister Bruno Le Maire. Photo: AFP

Hence the large chunk of the €100 billion – about a third – which is to be spent on the greening of French national infrastructure and industry.

This may, in itself, be a sound idea, but critics say it will not provide the kind of economic sugar-rush that the French economy will need this year and next.

The post-war Marshall Plan was largely based on Keynesian, demand-side economics. Amongst other things the British economist John Maynard Keynes (1883-1946) had argued in the 1920s and 1930s that money pumped into the system always increased demand, economic activity and jobs. In the 1970s and 1980s, that approach was reversed by Thatcher-Reagan type supply-side economics (reduced money-supply, tax-cuts, de-regulation etc).

The “Macron Plan” is a strange blend of demand (big-spending) and supply-side (tax-cuts on business) approaches. It should perhaps be called Macronomics.

The unions may be right. Macron and Castex should, perhaps, have poured more of their billions into a front-loaded programme to get the country through the next painful couple of years. As a country heavily dependent on tourism, aeronautics and aviation, France is uniquely vulnerable to the coronovirus pandemic – far more than it was exposed to the financial crash of 2007-2008. 

But we should also recall what has NOT happened.

Most western countries responded to the 2008 financial crisis with neither “Keynes” nor “Thatcher” but spending cuts AND tax rises – demanded by “the markets” which had created the problem in the first place. This so-called “austerity” proved socially destructive and economically counter-productive.

Twelve years later France and the EU – and also the UK – have chosen instead to go back to the 1930s and borrow and spend their way out of the coronovirus crisis. Hardly a peep from “the markets” so far.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

TRAVEL NEWS

France launches ski safety campaign after rising number of accidents

Injuries and even deaths while skiing in France have seen a sharp rise in recent years - leading the French government to create a new ski safety campaign.

France launches ski safety campaign after rising number of accidents

The early part of the ski season in France was dominated by headlines over the lack of snow in popular mountain resorts – but, now that climatic conditions have started to improve for skiers and there is at least some snow, the winter sports season is in gearing up to hit full swing.

READ ALSO Snow latest: Have France’s ski resorts reopened?

Heading into the winter holiday season – French schools in ‘Zone A’ break up for two weeks on February 4th, followed on February 11th by schools in ‘Zone B’, while schools in Zone C finish for the vacation on February 18th – the government has launched an awareness campaign highlighting skiing good practice and how to avoid accidents.

READ ALSO What can I do if I’ve booked a French skiing holiday and there’s no snow?

The Pratiquer l’hiver campaign has advice, posters and videos highlighting safety on the slopes, in an effort to reduce the number of accidents on France’s mountains – where, every year, between 42,000 and 51,000 people have to be rescued, according to the Système National d’Observation de la Sécurité en Montagne (SNOSM)

The campaign, with information in a number of languages including English, covers:

  • on-piste and off-piste safety advice (signalling, avalanche risks, freestyle areas, snowshoes, ski touring, etc.);
  • Help and instructions for children explained in a fun and educational way (educational games, games of the 7 families to be cut out, safety quizzes, advice sheets for sledding, skiing, prevention clips, etc.);
  • physical preparation (warm up before exercise, prepare your muscles and stretch well, also how to adapt the choice of pistes and the speed to your physical condition);
  • equipment and safety (helmet, goggles, sunscreen, etc.);
  • marking and signalling on the slopes (opening and marking of green, blue, red and black slopes, off-piste).

There are 220 ski resorts in France, the world’s second largest ski area, covering more than 26,500 hectares of land, across 30 departements.

In the 2021/22 ski season, totalling 53.9 million ‘ski days’, according to SNOSM, emergency services made 49,622 interventions in France’s ski areas, and 45,985 victims were treated for injuries.

The results show an increase in the number of interventions by ski safety services – a rise of 13 percent compared to the average of the five years prior to the pandemic – and the number of injured, up 8 percent. 

A few incidents on the slopes made the headlines at the time, including the five-year-old British girl who died after an adult skier crashed into her in the Alpine resort of Flaine, and the French actor Gaspard Ulliel, who died at the age of 37 after an accident while skiing in La Rosière, Savoie.

In total, 12 people died as a result of skiing incidents in France in the 2021/22 ski season. Three died following collisions between skiers, two after hitting an obstacle, and seven as a result of a fall or solo injuries. SNOSM also reported “a significant number of non-traumatic deaths, mostly due to cardiac problems” on France’s ski slopes.

The injuries due to solo falls – which represent 95 percent of all injuries –  on the ski slopes increased 2 percent compared to winter 2018/2019. Collisions between users fell, however (4.8 percent against . 5.6 percent) as did collisions between skiers and other people, and obstacles (0.7 percent compared to 0.85 percent).

The number of fatalities caused by avalanches, however, is at a historic low over the period 2011 to 2021, in part because of a relative lack of snow – leading to a drop in the number of avalanches and fewer people going off-piste, while awareness campaigns are hitting their mark, according to SNOSM.

SHOW COMMENTS