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Didn't get that!

It's hard to understand everything. The Government's actions, by their very nature, lack sufficient explanations while, for citizens, "ignorance of the law is no excuse". So, what should we do? Well, as it turns out, an article on the economy can help out both sides.

You just need to read Pierre-Antoine Delhommais’ acerbic writing in the weekly Le Point to understand: “While France is one of the most egalitarian countries in the world, why are we convinced otherwise?” And read the daily Le Figaro to try to gain more wisdom: “There has been serious disruption in social and economic conditions in France for several months. However, according to the Viavoice barometer for HEC, Le Figaro and BFM Business, decision-makers seem to be increasingly optimistic, in contrast to the beginning of 2019.

The weekly “yellow vest” rallies and, more recently, the uncertain outcome of the major national debate launched by the French President, do not seem to be having an undue impact. In particular, the decision-maker attitude index gained seven points between July 2018 and January 2019 and consequently halted the uninterrupted decline. Duly noted! Other news that is a bit unsettling to the economic assessment concerns the government deficit, and the daily Le Figaro is worked up about it: Last year, the French government deficit was equivalent to 2.5% of the gross national product (GNP), down 0.3 points year-on-year, and thus remains within the boundaries of the European stability pact, ahead of an already-planned increase above the 3% threshold in 2019, according to data published Tuesday by INSEE. At the same time, INSEE, which published the initial results of the French government’s financial statements for 2018, reported a €56.6 billion increase in the French government’s debt last year to €2,315.3 billion, below the 2017 level (up €70.2 billion).

Debt to GNP, on the other hand, remains stable at 98.4%. The 2018 deficit was the lowest since 2006, in relation to GNP, and comes out below the level indicated (2.7%) in the 2019 budget voted at the end of last year.
Then, a surprise from the United States, the pause by the Federal Reserve.
The French government’s deficit is now below 3% of GNP for the second consecutive year, a decline expected by the European Commission, which in the spring of 2018 abandoned its procedure against excessive deficits.
But it will again exceed this threshold as of 2019 due to the one-off impact, estimated at 0.9 percent of GNP, from the changeover from the employment competitiveness tax credit to a reduction in expenses.” As for France and its deficits, one question: Are we really that dependent on the Chinese economy? Le Figaro is upfront in its response: “Emerging economies, increasingly more dependent on China, are worried about the slowdown in Chinese growth. Developed countries, certainly more exposed to these upheavals, are also concerned. When President Xi Jinping visited Italy and France, Le Figaro  analysed the situation. After years marked by incredible growth and economic development in high gear, China has been showing signs of weakness for several months and is starting to slow down. In 2018, China’s GNP grew by 6.6%, its lowest rate in 28 years. Besides this single indicator, the warning signals are increasing: growth has not stopped declining all year, no end is immediately in sight for the Chinese-American trade war and other statistics, like retail sales and government debt are just as troubling. Worse, in mid-February, the Trade Ministry warned that a further slowdown in Chinese consumption was “very likely” in 2019, a situation that will certainly not reassure international decision-makers. As I said, a deficit of clarity.

Christian Moguérou

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