Coronavirus: The French Economy is Suffering, Government Measures for Businesses

The French government expects French growth to slow down and business activities will be penalized in 2020 by the coronavirus.

Bruno Le Maire, the Minister of Economy, estimated this Monday noon that the coronavirus would have a “severe impact” in 2020 for French businesses and growth.

New crisis meeting at his government. While the coronavirus continues to rage in France, with 19 deaths observed according to the last report, more than one trader is worried about the economic consequences of the epidemic.

The Minister of Economy Bruno Le Maire, accompanied by the Minister of Labour Muriel Pénicaud and the Secretary of State for the Economy Agnès Pannier-Runacher, received in Bercy this Monday 9th March 2020 several national economic actors. 

The objective of this meeting: to take stock of the situation and try to limit as best as possible the damage to the activity of French companies, in particular those of restoration, the hotel trade, tourism or transport.

On average, the ministers said, caterers, have lost nearly 60% of their turnover since the start of the epidemic, and hotels between 20 and 40%.

A “severe” impact on growth

The impact of the coronavirus on growth will be “severe”, immediately warned Bruno the Mayor after this meeting, around noon. Despite “stable bases”, he stresses, we should indeed expect a drop of “several tens of points in gross domestic product (GDP)” for 2020.

An echo to the estimates of the Banque de France, which has revised downwards its growth forecasts for the first quarter of this year, up to 0.1% against 0.3% initially planned.

A new quantified assessment of French growth is due to be published on April 15, 2020.

Facilitate procedures for companies in difficulty

“Simplification, speed, responsiveness”, hammered Muriel Pénicaud, the Minister of Labour , alongside Bruno Le Maire.

To offset the consequences of the coronavirus on the activity of French companies, the government intends to facilitate the postponement of social security contributions and possible tax reliefs for the most vulnerable companies. “The postponement of these charges can be done directly by email, directly,” said the Minister.

Another commitment of the government: to encourage companies in difficulty to declare themselves more easily in partial activity, that is to say in technical unemployment. “To date, 900 companies, or 15,000 employees, have requested it. This represents 52 million euros for the State. And of course, we expect to have to spend more, ”explains Muriel Pénicaud.

Already, at the end of last week, Bruno le Maire had for his part called banks and insurance companies in Bercy to ask them to be more flexible with companies, in particular “SMEs, very small businesses, craftsmen and traders, that is to say, say the smallest businesses, which are the most vulnerable, “the minister recalled on Monday.

Working together to revive the economy

The Minister of Economy once again called for real “national solidarity which must play at all levels”. He notably called on the Public Investment Bank (BPI), “fully mobilized to support the treasuries of SMEs and mid-sized companies”, he detailed.

The Minister also intends to exchange regularly with the presidents of the Association of Mayors of France (AMF) and the Assembly of Departments of France in order to “apply cases of force majeure for all of their public contracts” and thus ” do not penalize the companies concerned. “

Work must also take place on a European scale is also essential, whether with the European Central Bank (ECB) or the other finance ministers of Europe, who are to meet on March 16. 

“There will be a before and after coronavirus from an economic point of view. It is therefore essential to work together on a coordinated and strong economic recovery plan.”

World economy falters

French companies are not the only ones to express their concerns regarding the spread of the coronavirus. Financial markets around the world expect a black Monday for the stock markets, like the ACC which lost more than 7% this morning, a further fall since last weekend.

This is its biggest drop in session since the announcement of the Brexit referendum on June 24th, 2016.

Global financial markets have also witnessed a historic oil collapse, the price of which lost nearly 20% on Monday.

If the decline continues, oil could reach its largest drop in value since the first Gulf War in 1991.

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