2024-03-13 05:06:43
The Banque de France revises growth downwards
If the government seemed very optimistic with its growth forecast of 1.4% in France for 2024, the Banque de France has always been more cautious. A judicious choice: until now, it was counting on growth of 0.9% for 2024. And as the government has revised its downwards, now counting on 1%, a forecast still considered optimistic, one might have thought that the Banque de France and the executive were on the same wavelength.
Nay! In his Interim macroeconomic projections of March 2024, published on March 12, 2024, the Banque de France is once once more giving Emmanuel Macron, Gabriel Attal and Bruno Le Maire a cold sweat. The institution now expects 0.8% growth for 2024, or 0.2% less than the government. « the new information available leads us to revise growth very slightly downwards in 2024, to 0.8%, compared to 0.9% in our previous forecasts “, she writes.
Good news on inflation in France
If growth is revised downwards, households will be happy to know that the Banque de France does not expect inflation to not follow the expected course. From the end of 2024, the institution expects it to fall to 2.5%, before falling below the fateful 2% mark in 2025 and 2026. “ In total, underlying inflation (HICP excluding energy and food) should fall significantly to 2.4% in 2024, before reaching 2.2% and 1.9% respectively in 2025 and 2026. »
The fall in inflation, and its return below 2%, might nevertheless boost French growth, in particular thanks to consumption. So, although it has lowered its growth forecasts for 2024, the Banque de France offers good news for the following years. Thanks in particular to a drop in energy prices, the BdF announces “ an upward revision of GDP growth in 2025 and 2026, at 1.5% and 1.7% respectively (compared to 1.3% and 1.6% in our previous forecasts). »
Full employment ? The government is in complete delirium
Certainly, inflation is improving and growth might pick up once more, although later than expected. But the government has another objective: full employment. And, to do this, he announced important measures aimed at forcing the unemployed to return to work, in particular by reducing their unemployment rights. A trend that might continue.
Except that the Banque de France absolutely does not believe in it. That unemployment in France falls below 5%, a level considered “full employment”, seems more an illusion than a reality. “ Due to the transitional decline in employment expected in 2024-2025, the unemployment rate would increase slightly to reach a level close to 7.8% from the end of 2024 to the end of 2025before resuming its decline in 2026 towards the level that we anticipated in our December forecasts (7.5%). »
Austerity as a solution: more budget cuts?
Lower growth, unemployment which is not falling, inflation which is improving… the French economy is giving very mixed signals. But the government seems to remain in its positions: its primary objective is to reduce the public debt and deficit.
An objective which results in an austerity budget, announced by Gabriel Attal and his ministers, which provides for more than 30 billion euros in savings over two years, by cutting among other things certain social benefits. Because the executive refuses to increase taxes or tax the record profits of large companies. Difficult to understand when 2023 has signed, for the CAC 40, the third consecutive year with more than 140 billion euros in net profits. That’s more than 400 billion in three years.
Worse: the Court of Auditors, in its annual report, once once more singled out the government for its strategy and policy. Pierre Moscovici, its president, believes that the savings announced are not sufficient… and that 50 billion are needed, an unprecedented level. But the latter remains realistic and believes that the question of taxation of superprofits should not be ruled out while the debt is exploding and the public deficit in 2023 ultimately proved to be higher than 5% of GDP, once morest 4.9% hoped for. by the executive.
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