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France’s Finance Minister says national debt will rise as Covid-19 destroys rebound hopes

France's government deficit will deepen and public debt will rise after a lingering Covid crisis smashed hopes of a rapid economic rebound, Finance Minister Bruno Le Maire said on Sunday.

France's Finance Minister says national debt will rise as Covid-19 destroys rebound hopes
The Covid-19 measures have affected the economy, says France's Finance Minister. Photo: Reuben Mcfeeters/Unsplash

The annual deficit, which has spiralled as President Emmanuel Macron’s government tries to prop up the struggling economy with massive spending, is now expected to reach nine percent of gross domestic product (GDP) in 2021, he told reporters.

This compares to an 8.5 percent estimate included in the government’s 2021 budget plan, and a three percent deficit limit EU members must usually respect, but have swept aside as they deal with Covid.

The Minister had already told Sunday paper JDD that economic growth was now likely to come in at 5.0 percent this year and not 6.0 percent as believed earlier.

The government last week extended Covid restrictions to cover the entire country and said they would remain in place for at least a month.

READ ALSO: Doctors fear worst of Covid-19 wave still to come in France

“These measures will affect the French economy,” Le Maire said. France’s debt level was now likely to hit 118 percent of GDP this year, Le Maire told the Grand Jury LCI-RTL-Le Figaro TV programme, up from an earlier 115 percent estimate and around double the EU’s 60-percent debt ceiling.

The minister called the new forecasts “exact and sincere”. France is going through a third wave of the pandemic which has seen daily new cases surge to 40,000, around double their level a month ago.

Le Maire also said he had reached an outline agreement with the European Commission allowing France to pay more aid to flagship carrier Air France which has been struggling due to Covid restrictions along with the rest of the world’s airlines.

In return, Air France would have to give up some slots at Orly, Paris’s second-busiest airport after Charles-de-Gaulle, he said.

The sums involved would be discussed with the carrier, which was expected to vote on the deal at a board meeting Monday, Le Maire said.

READ ALSO: Bars, terraces and cultural sites – How France is planning to return to normal from ‘mid May’

Rival airline Ryanair has lambasted French state aid for Air France, saying it distorts competition.

Although the Irish airline lost its legal case against state aid for the French carrier, it has argued that any additional help should be made contingent on Air France giving up airport capacity.

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COVID-19

New Covid wave in autumn ‘virtually certain’ say French experts

The head of the government's new health advisory says that a surge of Covid cases when the French head back to work after the summer break is virtually certain.

New Covid wave in autumn 'virtually certain' say French experts

Immunologist Brigitte Autran, president of new government health advisory body the Comité de veille et d’anticipation des risques sanitaires (Committee to monitor and anticipate health risks) which has replaced the Conseil scientifique, told Le Parisien that “the Covid epidemic is not behind us” and said that the French would have to get used to “living with” the virus.

The Covidtracker website currently shows that the virus is in decline across France, with the R-rate currently at 0.7 – any figure lower than one indicates that the number of infections is falling.

Autran, whose appointment as head of the new body was confirmed on Wednesday, said that the most likely scenario was for a “new epidemic peak in the autumn”, when people return to work after the summer holidays.

“Will it be due to a new variant or the return of cold weather?” she said. “We are not soothsayers, but it is almost certain that there will be a wave.”

“Today, we must go towards living with it,” she added, reintroducing the French to an expression previously used by President Emmanuel Macron and several ministers.

“This does not mean accepting the deaths or the severity of the disease,” she went on, pointing to the fact that health authorities in France still have “levers to activate” to fight the virus. 

Despite the fact that nearly 80 percent (79.6 percent) of people over the age of 12 are fully vaccinated against the virus, she said that, “unfortunately there are still too many people who have not been vaccinated or revaccinated.”

And she said the new body would work with the government to improve the public’s access to drugs, such as Paxlovid, and vaccines.

Vaccination is still open to anyone who has not yet had their shots, while a second booster shot is on offer to certain groups including over 60s, pregnant women, those with health conditions or people who are in close contact with vulnerable people.

EXPLAINED Who qualifies for a second Covid vaccine booster shot in France?

The French government in August voted to end to State of Emergency that allowed it to impose measures like travel bans and lockdowns, although further restrictions could be put in place if cases rise again and parliament agrees. 

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