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France’s structural problems have been exposed by the pandemic

A pair, one checking his smartphone, benefit from the view of the Eiffel Tower at sundown in Paris on February 23, 2021.

Ludovic Marin | AFP | Getty Images

France may nonetheless be within the throes of the coronavirus pandemic because the delta variant spreads quickly, however officers and enterprise leaders are looking forward to a interval of restoration and reflecting on the broader outlook for France’s political and financial future.

“The rebound is very steep, but it’s even steeper than last year. So we are quite happy with that,” Agnès Bénassy-Quéré, chief economist on the French Treasury, instructed CNBC Sunday, pointing to the nationwide statistics workplace elevating its progress forecast for France in 2021 to six%.

“The official forecast is still at 5% for 2021 because we are still cautious about the fall. As you were saying, there is a delta variant, and we have kept some restrictions up to the end of the year. So already in the spring, when this forecast was made, it included some restrictions, light restrictions of the second half of the year. So far, we have not changed this forecast, then we will see what happens when we have to build the 2022 budget,” he stated, talking to CNBC’s Charlotte Reed whereas attending an financial discussion board in Aix-en-Provence.

Of course the Covid-19 pandemic has left a whole lot of destruction in its wake and no much less in France, the place over 5.8 million infections have been recorded and over 111,000 deaths thus far, according to data from Johns Hopkins University.

Like different international locations, France launched emergency measures to assist the financial system, companies and employment in the course of the pandemic and there are actually some considerations that the tapering of that assist may trigger job losses and a few corporations to close down.

Bénassy-Quéré stated the federal government had been “very cautious about that,” however that the labor market was presently resilient.

“There is a tapering, phasing out of the support, the emergency support, which is gradual over the summer. And there will still be some support, for instance [the] long-term unemployment scheme, which will still be in place in the fall for such activities as [the] aircraft industry, where we really want to keep the skills in the industry, and so there will be some reskilling programs.”

However, he famous that whereas exercise in some industries was already above a pre-crisis degree, some are lagging behind, equivalent to tourism. As nicely as an unequal restoration, one other drawback for the federal government is that vast quantities of borrowing has pushed up France’s debt pile to a report excessive. Earlier this 12 months, France’s nationwide statistics workplace Insee reported that authorities debt stood at 115.7% of GDP on the finish of 2020, up from 97.6% in 2019.

How France can pay down that debt pile is unsure for now as there’s little prospect of the federal government, underneath President Emmanuel Macron, elevating taxes simply 10 months forward of a presidential election. Whether Macron will go forward with bold (and unpopular) reforms to modernize and simplify France’s lumbering pension system can be unsure given the pandemic scenario.

So far, two rounds of regional elections in latest weeks have dispelled expectations that the far-right National Rally occasion — previously often known as National Front — may carry out nicely within the nationwide vote subsequent 12 months after a poor displaying within the areas. Voter turnout was low in each rounds, main some analysts to voice concern over the extent of voter disaffection in France.

Also attending the financial gathering at Aix-en-Provence, Valérie Rabault, president of the Socialist Group on the National Assembly instructed CNBC Sunday that “French society is broken” as evidenced by the low turnout within the regional votes.

“We had local elections and less than 35% of people went to vote, so this is very low. This was the first time in France that we have so few people going to vote for local elections. For me, it does reflect … a kind of indifference from the people to build up a common project for France, for the society, and this is the big challenge for us as politicians to be able to tackle this issue and to have [a] more positive message after the crisis,” she stated, including “we need to define something, a common project that would be able to unify people.”

Structural issues

Business leaders attending the financial discussion board in Aix-en-Provence instructed CNBC that there are structural issues that stay in France that aren’t so simply fastened.

“The divides that have existed in French society are still there whether it is the territorial divide, the generational divide and the very low percentage of people voting like we saw in the last election,” Pierre-André de Chalendar, chairman of French development supplies group Saint-Gobain, instructed CNBC Saturday.

“The priorities are clear, (they are) energy transition, re-industrialization — which is the best way to crack this territorial divide — and putting more emphasis on the youth, on education. The question is how we do that and I think in France the issue is that the state, overall, is too big and is not efficient enough.”

Ross McInnes, chairman of Safran, agreed that “two important structural issues” needs to be addressed in France, with the principle one being the standard of schooling in France.

“On education, our school system has failed us, collectively,” he instructed CNBC. “One hundred thousand young French people … leave secondary school without good maths, you know, the three ‘Rs’ of reading, writing and arithmetic. And that is something we urgently have to fix. Otherwise, companies are not going to be able to recruit people of talent for good jobs.”



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