France: The risk of a slow deterioration in the economic and social situation

In 2020-2021, France is able to run a fiscal deficit as high as that desired by the government without difficulty because it is being monetised by the ECB. This huge support from the French government explains the muted rise in unemployment, the lack of rise in bankruptcies and the lack of an income loss for households. But later (2022?), a number of negative factors will emerge: The end of the ECB’s full monetisation of fiscal deficits, which will bring back a fiscal constraint; Job losses in some economic sectors where production will remain weak even once the public health crisis is over; Bankruptcies among overindebted companies, which will have weathered 2020 and 2021 but with an excessive deterioration in their balance sheets; Offshoring by companies in search of lower production costs than in France to restore their profit margins. So there are grounds to fear that the deterioration in France’s economic and social situation will be delayed in time but severe and long-lasting .