Wednesday, 01 December, 2021

Coronavirus: France is pressing for a European recovery plan


The Heads of State and Government are holding a videoconference this Tuesday, before a Eurogroup at the beginning of next week. Bruno Le Maire calls for a “massive and coordinated” European recovery plan and warns that the French deficit targets will not be met this year.

“Europe is faced with its responsibilities.  It must provide proof of its usefulness and effectiveness, ”Bruno Le Maire pleaded on Monday.

After the last-chance summits on the euro zone, Greece or migration, will we have to get used to the proliferation of European meetings on the consequences of the coronavirus crisis? The pressure was in any case mounted a notch on Monday for greater European coordination in response to the economic consequences of the epidemic, while the financial markets were facing a real blow of tobacco.

Through its chief economist, Gita Gopinath, the IMF called for “A coordinated international response”. A little music that could only rejoice France, which has been arguing in this direction for some time. “Europe is faced with its responsibilities. It must provide proof of its usefulness and effectiveness ”, pleaded Bruno Le Maire during a press conference. For the Minister of Economy and Finance, we need a “European recovery plan” which is both “coordinated and massive”.

Scheduled videoconferencing

Proof that the emergency has settled in people’s minds at European level, the President of the European Council, Charles Michel, announced that he was going to organize a videoconference on Tuesday with the heads of state and government. Two weeks before a European summit, the Belgian deemed it essential to shake up the calendar, which some interpret, in Brussels, as a sign of the influence exerted on him by Emmanuel Macron. “Let’s act together now”, has tweeted the French head of state after being in contact with Charles Michel.

Because France was only partially satisfied with the video conference held by European finance ministers last week. While Bruno Le Maire hoped to send a strong signal to the financial markets, he had to face the reluctance of several member states. Technical work was therefore commissioned to reflect on ways to support economic activity, and the “Virtual European summit” this Tuesday could serve to increase the pressure on the next Eurogroup meeting on March 16 to produce concrete results.

“Flexibility and money”

“The economic effects of this health crisis are still uncertain. But we must at least find a political agreement to trigger a common recovery once it is behind us ”, we explain to Bercy. For the moment, the answers are quite disparate from one country to another. On Monday, the German government, for example, announced a series of measures to support its economy with the easy use of short-time work for companies in difficulty and a budget of 12.8 billion euros over 4 years for infrastructure. A package back from what the SPD hoped for, proof that the coronavirus has not yet weakened budgetary orthodoxy in Germany.

Read also:

Coronavirus: the government reaches out to struggling businesses

At European level, Ursula von der Leyen, President of the Commission, summed up the situation on Monday: “Our approach is flexibility and money”. This second point refers to the need to inject liquidity into the economic system. Beyond the strong expectations surrounding the next meeting of the European Central Bank, one of the avenues mentioned – but far from being confirmed – could consist in entrusting the European Investment Bank with the mission of supporting businesses, in particular SMEs, in order to limit their cash flow shock.

Finally, as confirmed by Ursula von der Leyen, the European Commission is considering ways to relax the rules governing state aid in Europe. The goal: to let governments come to the aid of the sectors most affected by the crisis. This track is viewed with kindness in Paris, where it is recalled that a similar easing had been decided after the financial crisis of 2008.

A risk on debt

As for flexibility, it refers to the need not to take into account, in Brussels’ assessment of national deficits, expenditure linked to the coronavirus – a point already noted about Italy and called to be generalized on the continent. . France, whose deficit was expected at 2.2% of GDP this year, also intends to take advantage. Bruno Le Maire announced “Always aim to restore public finances, but there will be a time lag”.

This deterioration in the economic climate poses a risk to the level of debt, which was 98.8% at the end of 2019 and which could therefore approach dangerously close to the symbolic threshold of 100%. “The serious management of public finances remains a priority. But the fact of knowing if we are on a ratio of 98.9% or 100.1% weighs little in the face of the health and economic emergency ”, we respond to Bercy.

Read also:

Coronavirus: the impact on growth will be “severe” warns Bruno Le Maire

The Heads of State and Government are holding a videoconference this Tuesday, before a Eurogroup at the beginning of next week. Bruno Le Maire calls for a “massive and coordinated” European recovery plan and warns that the French deficit targets will not be met this year.

“Europe is faced with its responsibilities.  It must provide proof of its usefulness and effectiveness, ”Bruno Le Maire pleaded on Monday.

After the last-chance summits on the euro zone, Greece or migration, will we have to get used to the proliferation of European meetings on the consequences of the coronavirus crisis? The pressure was in any case mounted a notch on Monday for greater European coordination in response to the economic consequences of the epidemic, while the financial markets were facing a real blow of tobacco.

Through its chief economist, Gita Gopinath, the IMF called for “A coordinated international response”. A little music that could only rejoice France, which has been arguing in this direction for some time. “Europe is faced with its responsibilities. It must provide proof of its usefulness and effectiveness ”, pleaded Bruno Le Maire during a press conference. For the Minister of Economy and Finance, we need a “European recovery plan” which is both “coordinated and massive”.

Scheduled videoconferencing

Proof that the emergency has settled in people’s minds at European level, the President of the European Council, Charles Michel, announced that he was going to organize a videoconference on Tuesday with the heads of state and government. Two weeks before a European summit, the Belgian deemed it essential to shake up the calendar, which some interpret, in Brussels, as a sign of the influence exerted on him by Emmanuel Macron. “Let’s act together now”, has tweeted the French head of state after being in contact with Charles Michel.

Because France was only partially satisfied with the video conference held by European finance ministers last week. While Bruno Le Maire hoped to send a strong signal to the financial markets, he had to face the reluctance of several member states. Technical work was therefore commissioned to reflect on ways to support economic activity, and the “Virtual European summit” this Tuesday could serve to increase the pressure on the next Eurogroup meeting on March 16 to produce concrete results.

“Flexibility and money”

“The economic effects of this health crisis are still uncertain. But we must at least find a political agreement to trigger a common recovery once it is behind us ”, we explain to Bercy. For the moment, the answers are quite disparate from one country to another. On Monday, the German government, for example, announced a series of measures to support its economy with the easy use of short-time work for companies in difficulty and a budget of 12.8 billion euros over 4 years for infrastructure. A package back from what the SPD hoped for, proof that the coronavirus has not yet weakened budgetary orthodoxy in Germany.

Read also:

Coronavirus: the government reaches out to struggling businesses

At European level, Ursula von der Leyen, President of the Commission, summed up the situation on Monday: “Our approach is flexibility and money”. This second point refers to the need to inject liquidity into the economic system. Beyond the strong expectations surrounding the next meeting of the European Central Bank, one of the avenues mentioned – but far from being confirmed – could consist in entrusting the European Investment Bank with the mission of supporting businesses, in particular SMEs, in order to limit their cash flow shock.

Finally, as confirmed by Ursula von der Leyen, the European Commission is considering ways to relax the rules governing state aid in Europe. The goal: to let governments come to the aid of the sectors most affected by the crisis. This track is viewed with kindness in Paris, where it is recalled that a similar easing had been decided after the financial crisis of 2008.

A risk on debt

As for flexibility, it refers to the need not to take into account, in Brussels’ assessment of national deficits, expenditure linked to the coronavirus – a point already noted about Italy and called to be generalized on the continent. . France, whose deficit was expected at 2.2% of GDP this year, also intends to take advantage. Bruno Le Maire announced “Always aim to restore public finances, but there will be a time lag”.

This deterioration in the economic climate poses a risk to the level of debt, which was 98.8% at the end of 2019 and which could therefore approach dangerously close to the symbolic threshold of 100%. “The serious management of public finances remains a priority. But the fact of knowing if we are on a ratio of 98.9% or 100.1% weighs little in the face of the health and economic emergency ”, we respond to Bercy.

Read also:

Coronavirus: the impact on growth will be “severe” warns Bruno Le Maire