Coronavirus: France’s economy is in free fall, but ministers promise the end is in sight

A historic recession can’t be avoided, but can complete collapse be averted?

Paris: the tourism sector accounts for around 10 per cent of France’s GDP (EPA)

France is in the midst of its worst recession since the Second World War. The country’s finance minister, Bruno Le Maire, has warned that the economic crisis resulting from the coronavirus lockdown could eventually be of a similar magnitude to that of the 1929 Great Depression. Yet amid the chaos he remains defiant, promising that the country will recover, “whatever the cost”.

This week, Mr Le Maire hiked up his economic support plan for the country from €45bn (£39bn) to €110bn after President Emmanuel Macron announced that strict lockdown measures would continue for another four weeks.

Mr Le Maire outlined how the rescue package would be spent, promising that it would prevent businesses from going bankrupt and avoid mass unemployment and further economic collapse.

“The €110bn economic emergency plan is an investment in the future,” he told BFM TV on Thursday evening. “By spending this money, we protect our businesses, our employees, our skills.”

The package ranges from a €20bn (£17.2bn) fund to support major corporations, to bonuses for front line healthcare workers and carers. The way to finance the spending, Mr Le Maire said, is not through taxes but through economic growth. That means ending the lockdown and getting back to business.

With the country under full lockdown until 11 May, the historic recession is going to get worse before it gets better.

The economy is currently operating at around one third below normal and the Banque de France has predicted that for every two weeks the country remains in lockdown, the economy will shrink by a further 1.5 per cent.

Mr Macron’s lockdown extension announcement also prompted revised predictions that the economy would shrink by 8 per cent this year, instead of the 6 per cent stated last week.

Even after 11 May, it will be a slow and staggered return to normal. On that date, schools and some businesses will reopen but all leisure activities and social gatherings will remain banned until at least mid-July. As for international travel, the timeline for its return remains indefinite.

This will be particularly significant for one of the most important sectors of France’s economy: tourism.

France is the most-visited country in the world, welcoming close to 90 million international tourists each year. While transport, retail and construction industries have been hit hard, it is the tourism sector that will probably be the most severely impacted – accounting for around 10 per cent of the country’s GDP.

The beginning of the lockdown saw French ski resorts forced to close, but as containment measures stretch into the summer, the lack of tourists could threaten the livelihoods of everyone from hoteliers and restaurateurs, to tour guides and sommeliers. Any lingering fear of foreign travel that remains post-lockdown could also effect the sector for years to come.

Before the economy can recover, the country must first recover. France’s national health agency has recorded more than 160,000 confirmed cases of Covid-19, which have resulted in 17,920 deaths. This makes it the fourth worst affected country in the world by the coronavirus pandemic, but there are signs that the worst may be over.

Thursday marked the eighth straight day that intensive care unit patients fell, and the second day that the number of people in hospitals also dropped.

Whether these numbers continue to fall may well depend on how determined the government is to risk sending people back to work for the economy to recover, at any cost.