The Covid crisis pushes the French budget deficit of 47 billion euros further in the red
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France‘s budget deficit for 2021 will amount to 220 billion euros, some 47 billion more than previously estimated, admitted Olivier Dussopt, the Minister of Public Accounts. The 2020 deficit was already at an all time high.
The budget deficit is the difference between what the government absorbs in terms of taxation and what it spends to run the country.
The probable figures are presented to parliament, debated and form the finance law for the next 12 months.
The increase this year, of more than 20% the original estimate, is a direct result of the measures the government continues to take to support the recovery after the devastating effects of the Covid-19 closures on the second largest economy in the euro area , said the minister. mentionned.
The government will now be forced to present a rectification bill to parliament next week, in order to get approval for the additional emergency spending.
It is not yet clear how the revised figures will affect the budget deficit when expressed as a percentage of gross domestic product (GDP, a measure of the wealth of the French economy), which was set to reach 9% this year, a record high. ‘after war. .
Public debt was previously estimated at 118% of GDP.
Half a trillion euros over three years
The Covid-19 pandemic is expected to cost the French state nearly half a trillion euros over three years – 158 billion euros in 2020, 171 billion euros in 2021 and an additional 96 billion euros in 2022, Dussopt said in April.
France has borrowed heavily to keep the economy afloat thanks to three nationwide lockdowns.
The loans have been used to compensate those temporarily made redundant and to help businesses struggling to stay afloat during the crisis.
The slow growth of the French economy does not help matters.
The government expected 0.4% in the first quarter ravaged by the crisis. Real growth remained at 0.1%.
Things have certainly improved over the past three months, but it is not yet certain that the government’s target of 5% growth for the year will be met.