A view of the financial district of La Defense seen from Paris, France. Reuters
France’s budget deficit is expected to reach around 220 billion euros ($268.16 billion) this year as a result of various support measures for the coronavirus-hit economy, budget minister Olivier Dussopt told Agence France-Presse on Saturday.
The previous estimation stood at 173.3 billion euros, Dussopt said.
The European Commission forecasts economic growth of 5.7 per cent in France this year while the government targets growth of 5%.
French newspaper Les Echos reported that the French government was to present lawmakers next week with a bill containing additional emergency stimulus measures worth 15 billion euros.
The measures, which come on top of emergency aid close to 100 billion euros last year, are expected to include tax rebates for hotels, restaurants and bars, as well as various support schemes, such as compensation for lost working hours.
France’s economy contracted 0.1 per cent in the first quarter of 2021, revised official data showed today, marking a slip into recession as it struggled to recover from a pandemic-induced downturn.
The unusually sharp downwards revision from an initially reported expansion of 0.4 per cent in January-March reflected a poorer than expected performance in the construction sector.
It marked a second consecutive quarter of contraction after the French economy shrank 1.5 per cent in the final three months of 2020.
The revised figure from the INSEE statistics office underscores the challenges governments have faced in responding to the coronavirus pandemic.
French President Emmanuel Macron has spent tens of billions of euros to shore up activity and protect jobs as lockdowns to contain Covid-19 have temporarily closed businesses, especially in the services sector.
France and its European neighbours faced a fresh wave of coronavirus infections this year, prompting governments to reimpose strict curbs to contain the spread.
In a further sign of difficulties, household spending, the driving force of France’s economic activity, fell 8.3 per cent in April, at the start of the second quarter after President Emmanuel Macron ordered a third national Covid-19 lockdown. The real disposable income of households fell by 1 per cent in the first quarter while the savings rate dipped to 21.8 per cent from a revised 22.7 per cent at the end of 2020.
Covid-19 restrictions are now being unwound in France. Finance Minister Bruno Le Maire this week stuck to his growth forecast of 5 per cent for 2021 and said the crisis was “moving behind us, though we must remain cautious”.
Full year 2020 GDP was slightly better than expected with a contraction of 8 per cent compared to a previous estimate of a fall of 8.2 per cent, INSEE said.
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