France to scale down emergency aid and balance the books on Covid
France’s Covid-hit businesses are set to reap an extra 15 billion euros in emergency funds intended to help heal the economy. But despite digging into its pocket once again, the government has indicated it’s time to balance the books on the cost of recovery.
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The latest aid – targeted at restaurants, bars, hotels and other businesses suffering from a lack in tourism – will help mark a transition to a return to normality, says the man in charge of public accounts, Olivier Dussopt.
Announcing the measure Wednesday in an interview alongside Economy Minister Bruno Le Maire, Dussopt said the money would help finance a “gradual exit” from the emergency bailouts that have propped up the sector for more than a year.
With restaurants already slowly opening ahead of the summer, it’s hoped a rebound in tourism – coupled with the latest cash injection – will be enough to nurse the industry back to health.
Counting the cost
When the pandemic hit, President Emmanuel Macron threw lifelines to all sectors of the French economy –promising that workers and businesses would be protected “whatever the cost”.
The bill has been steep – 230 billion euros and counting – inflated by solidarity funds, tax exemptions, compensation schemes, debt restructuring, emergency accommodation and more.
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By the end of next year, the cost of Covid to the France is estimated to rise to 424 billion euros. The budget deficit, meanwhile, may hit a postwar record 9 percent of GDP.
Despite the price tag, Le Maire is adamant that, as the dust from Covid settles and life returns to normal, Macron’s whatever-the-cost approach can “no longer be the rule”.
Bigger spending
With emergency aid starting to shrink, and with presidential elections looming in 2022, Macron must now show voters he’s able to get the economy back on track.
The government’s strategy to achieve this is through spending and investment, namely under the 100 billion euro “France Relance” plan – 40 billion euros of which will come from the European Union.
With the money yet to arrive, France has piled pressure on the EU to get moving on the economic recovery plan – worth 750 billion euros.
Le Maire said the EU had “lost too much time” since the stimulus package was approved last July – warning the bloc risked falling behind the US and China, whose economies were picking up quickly.
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