After INSEE, which estimated on March 26 that the shock caused by the coronavirus epidemic would cost France around 3 points of GDP over the year, the OFCE, Sciences-Po’s economic research center, evaluated, Monday, March 30, the impact on activity and employment of the health crisis and the containment measures it imposes. “It’s a shock beyond measure with everything we’ve known”, insisted Xavier Ragot, its president. The proof in three key figures.
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► 30 points of GDP lost per month
The OFCE estimates that the containment measures imposed to stem the epidemic would cost a little more than 30 points of monthly GDP, or a loss of 2.6% over the year, which represents 60 billion wealth losses per month. containment.
This shock ” considerable “ is mainly transmitted through the demand channel, via the fall in household consumption, but also the drop in investment, particularly in the construction sector, with the stoppage of many projects. To this must be added the impact of the crisis on tourism, foreign and domestic, whose losses could turn around 14 billion per month due to the confinement and closing of borders.
The supply shock stems from the difficulty companies have in continuing their activities. Many have been forced to close by government decree, others face a shortage of labor for various reasons – sick employees, on leave for childcare, or exercising their right of withdrawal – which disrupts production .
It remains to be seen how much the bill will be if the crisis lasts more than a month. “Is two months twice as much? Hard to say at this time. There may be a snowball effect which worsens the situation, but also an effect of public policies and an adaptation of agents which mitigates the negative impact “, underlines Xavier Timbeau, director of the OFCE.
► 18% decrease in household consumption
The OFCE calculated that the direct impact of a month of confinement could lead to a fall in effective household consumption by 18%. In detail, out of 17 branches studied, seven concentrated around 80% of the shock, in particular those linked to transport services, accommodation and catering, construction and leisure activities.
“In contrast, seven branches should have little impact from the current containment”, notes the study. These include agriculture and the food industry, consumption of energy for housing, financial and insurance activities. Some may even hope to fare well, such as the IT and communications industries.
► 5.7 million jobs potentially affected by short-time working
The fall in demand and the slowdown or cessation of activity could provoke a massive recourse to short-time working which could, in the long term, affect 5.7 million people, or 21% of paid employment.
In this hypothesis – considering that all requests are accepted by Unédic -, the direct cost for public finances would be 12.7 billion euros per month, to which must be added 8.7 billion in contribution losses social. “Or a total budgetary cost which can amount to more than 20 billion euros per month”, specify the authors.
The presented study “Is only the first step in quantifying an unprecedented economic and social shock”, specifies Xavier Timbeau. It should therefore be “Revised regularly by incorporating effects not taken into account at this stage and on the basis of new data available”, he agrees.
But a certainty is already emerging: the French scenario of a return to growth, a further fall in unemployment and a control of public deficits seems seriously compromised.
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