At the beginning of the year, no one had obviously predicted that the health crisis would upset all forecasts for the year. And not many people would have bet on a fourfold increase in the public deficit.
All the forecasts made at the beginning of the year have shattered. The public deficit was supposed to be contained at 53.5 billion euros: it is finally expected to reach… 248 billion! A figure multiplied by four due to the measures taken to support the economy and the French people. Last year, the government managed to keep the deficit within the Brussels’ threshold of 3% of GDP. In 2020, the rate will skyrocket: it will be 11.3% of the gross domestic product. However, the European Commission has authorized member countries to let their deficits rise; it would have been impossible to do otherwise. And the end of the year does not look much better with the new lockdown in force since the end of last week.
The Finance Ministry is working on a new revised finance bill (PLFR) which includes an additional 20 billion euros in various aid measures.
The credits for the solidarity fund will increase to 19.4 billion (compared to 8.5 billion previously), while those dedicated to charge exemptions will be 8.2 billion instead of 5.2 billion. “Since last March, Covid has cost us 186 billion euros: 100 billion in lost revenue due to the drop in activity, and 86 billion in emergency health and economic measures,” it described.
Increase in public debt
In addition to these support measures is the September recovery plan (100 billion euros), part of which can be considered an investment. Also, the reduction in tax revenues: each month of confinement means 10 billion euros that do not enter public coffers, equivalent to between 2 and 2.5 points of growth.
The public debt of the country is finally expected to be 119.8% of GDP, compared to the previously estimated 117.5%.
