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Edition 20 December 2018 - Crédit Agricole S.A.
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  • Edition 20 December 2018

    France – What are the economic consequences of the Gilets Jaunes crisis?

    The "Gilets Jaunes" crisis affects growth in Q4 2018, revised to +0,2% qoq from +0,4%. In the face of this crisis and the demands of the "Gilets Jaunes", two sets of social support measures were announced. These two sets of measures, which represent around €10 billion, will result in a significant additional gain in purchasing power of 0.7% in 2019. Consumption will be more sustained, and GDP will increase more strongly than initially forecast, +1,8% yoy in 2019. However, the deficit-to-GDP ratio is revised upwards significantly for 2019, from 2.8% to 3.3%.

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  • Contents:

    - Negative effects on economic growth at the end of 2018
    - First set of fuel taxation measures
    - Second set of measures on purchasing power
    - Impact on 2019 growth
    - Implications on fiscal and economic policy

  • Extract:

    The support measures represent around €10 billion. The deficit-to-GDP ratio would be revised upwards significantly for 2019, from 2.8% to 3.3%. However, additional saving measures are expected to be put in place. There is talk of postponing the corporate tax cut for large companies and a GAFA tax. This slippage is also temporary: the effect of shifting from the CICE to cuts to contributions will disappear in 2020, which would reduce the deficit/GDP ratio to around 2% to 2.5%. With a deficit at 3,3% of GDP, public debt would be close to100%, at 99,2%. This slippage is temporary: and the effect of shifting from the CICE to cuts to contributions will disappear in 2020, which would reduce the deficit/GDP ratio to around 2% to 2.5%. The EU Commission should have a consiliatory attitude, also because this plan can be interpreted as a "transition cost" to help struggling populations and territories while pursuing structural reforms.

  • Associative topics : Economics | France

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