Roundup: France ramps up efforts to limit economic fallout from coronavirus -Xinhua

Roundup: France ramps up efforts to limit economic fallout from coronavirus

Source: Xinhua

Editor: huaxia

2020-03-14 00:05:52

PARIS, March 13 (Xinhua) -- With domestic economic activities in tatters, the stock market on the edge and the global economy facing a downturn due to the coronavirus pandemic, the government of France, the eurozone's second largest power, seeks to offer help to local businesses while it mulls Europe-wide remedies.

Calling the coronavirus outbreak the nation's worst public health crisis in a century, President Emmanuel Macron announced on Thursday evening a range of measures that include a fiscal stimulus package, tax relief and public spending measures to help mitigate the impact of the COVID-19 outbreak on the population and on growth.


In his first televised address to the nation dedicated to the coronavirus pandemic, the French head of state pledged that "everything will be done" to protect the companies of all sizes and all workers "whatever it costs."

He said that "an exceptional and massive mechanism of technical unemployment will be implemented," following which the state would pay the salaries of people forced to stop work. Also, firms would not have to pay taxes that fall due in March.

The government has ordered the public investment bank Bpifrance to guarantee loans and show flexibility with struggling enterprises to help them overcome short-term cashflow problems. The state-owned bank would increase guarantees on loans made to small and medium-sized firms to 90 percent of the amount borrowed from 70 percent.

Among the proposed economic remedies, the government is also studying how to set up and finance a solidarity fund to help the worst-affected companies. Companies can declare force majeure due to the outbreak if they cannot honor a contract with the public sector and postpone payments of certain social charges and taxes.

Since the end of December 2019, the coronavirus outbreak has disrupted industry, travel, entertainment and sports all over the world, paralyzing economic activities and forcing companies to apply for urgent aid from governments.

The French government expected the coronavirus crisis to deal a massive blow to the country's gross domestic product (GDP) in 2020, which it had previously expected to grow by 1.3 percent.

The coronavirus has also forced stringent travel restrictions and put millions of people in lockdown, notably in China, one of France's key tourism markets.

France is among the world's top tourist destinations. However, this year it can expect a 30-40 percent drop in the number of holidaymakers -- "an important impact" on the sector, which generates nearly eight percent of the country's GDP and provides two million jobs.

Antoine Goujard, an economist at the Organization for Economic Co-operation and Development (OECD), said that the government's measures to address the coronavirus crisis "are welcome" and they "should help cushion the macroeconomic shock."

"These measures play on two aspects: firstly, the safeguarding of viable businesses in the face of liquidity risks, and secondly, the preservation of employment and household incomes through targeted public aid," Goujard told Xinhua.

"However, we must remain vigilant about the scale and duration of the epidemic, as well as the use that companies will make of these measures in order to adapt them if necessary," he said.

The same stance was echoed by Nicolas Bouzou, director of Asteres, an economic studies and consultancy company. He praised the government's "excellent measures" to manage the economic crisis. However, "the cost will be significant," he warned.

"Growth in France should start recovering from September. The problem is how the economy will hold on and help companies survive until then," Bouzou told Canal+ television.


Stressing that the virus has no nationality, the French president called on the country's partners "to join forces, to cooperate" in handling a global health crisis and softening its financial and economic impact.

"It is not division that will make it possible to respond to what is today a global crisis, but rather our ability to act together," he said.

Macron's remarks came after U.S. President Donald Trump's decision to ban citizens of many European nations from entering the United States for 30 days in an attempt to contain the spread of COVID-19.

Washington's move has fueled investors' fears about an economic shock from the coronavirus pandemic, making European stocks suffer their worst day in history on Thursday.

In its interim outlook released in early March, the OECD cut this year's global economic growth projection to 2.4 percent, the lowest level since the 2008 financial crisis, warning that the global economy risks a further downturn unless governments take action to curb the spread of coronavirus.

To prevent the French economy from tumbling further during the crisis, Macron appealed to the responsibility of the G7 (Group of Seven) and the G20 (Group of Twenty) to coordinate a global response. He said he would speak with his American counterpart on Friday to "offer him an exceptional initiative".

At the European level, there would also be coordination among the eurozone members on a major package to relaunch the economy "whatever it costs," said Macron.

"We must also provide a European response. The central bank has already announced its first decisions today. Will they be sufficient? I don't think so," Macron said.

"Together, European governments must take decisions on supporting economic activity and relaunching it," he said.


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