Report
Patrick Artus

"Rate of protection" of economic agents by governments in this crisis

We look at the situations in the United States, the United Kingdom, Germany, France, Spain and Italy. We use the term "rate of protection" of economic agents by governments in the coronavirus crisis in 2020 for the ratio of the increase in the fiscal deficit to the loss of GDP expected today, and not expected before the crisis. If the rate of protection is 100%, the increase in the fiscal deficit offsets the loss of GDP and private sector economic agents will not lose any income. We obtain a rate of protection of: 152% in the United States 133% in Japan 138% in the United Kingdom 92% in Germany 66% in France 117% in Spain 106% in Italy The rate of protection is therefore low in France and abnormally high in the United States. The rate of protection can then be broken down into two parts: The "automatic" part, which comes from the loss of tax revenues caused by the decline in GDP; The "discretionary" part, which comes from new measures to support the economy. The discretionary part is high in Spain, Japan, the United Kingdom and the United States (between 60% and 75%), and particularly low in France (20% of the total deficit).
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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