Monday, April 19

The French blockade will affect economic growth, warns the Finance Minister | France

A new lockdown in France will affect economic growth this year, but it is too early to say how much, Finance Minister Bruno Le Maire warned.

Amid concerns that rising infection rates across much of continental Europe will slow recovery from the pandemic, Le Maire said Friday that a forecast for GDP growth of 6 may need to be revised downward. % this year.

President Emmanuel Macron ordered France into its third national closure on Wednesday, saying schools would close for three weeks as he sought to tackle a growing wave of infections and prevent hospitals from being overwhelmed.

France reported more than 50,000 new Covid-19 infections on Thursday and 308 deaths, while the number of people in intensive care units rose to 5,109.

Belgium was one of several European countries that joined France in imposing stricter restrictions. Starting this weekend, the Brussels government said schools would be closed, borders would remain closed, access to non-essential shops would be limited, and it reduced the number of people who could gather outdoors to four.

Le Maire said: “These measures will affect economic growth in 2021. We are in the process of evaluating it. There will be a new evaluation in the next few days ”.

He added that the new lockdown measures, which will also restrict travel and meetings to six people, would force the temporary closure of 150,000 businesses at a cost of 11 billion euros (9.3 billion pounds) a month.

The Governor of the Bank of France, François Villeroy de Galhau, said he did not expect the new restrictions to have an impact on the bank’s forecast of 5.5% growth in 2021, provided the restrictions did not last beyond the early 2000s. May.

Eurozone manufacturers rallied strongly in March, according to business surveys that indicated a similar recovery was taking place in the United States and Britain.

However, rating agency S&P Global said Europe faced an uneven and slower-than-expected recovery “following continent-wide vaccine launch delays, vaccine vacillation, the emergence of a third wave. and the threat of dangerous new variants “.

Ana Boata, head of economic research at insurer Euler Hermes, said the speed of vaccine launches was “the main factor” dictating how quickly economies recovered.

“At the current rate of vaccination, the US and UK will achieve herd immunity in May. While Europe should be able to vaccinate its vulnerable population by the summer, herd immunity is unlikely to be achieved before autumn at the current rate of vaccination unless governments redouble their efforts, ”he said.

Boata has calculated that the seven-week delay in vaccination in Europe is equivalent to 123 billion euros of economic losses, equivalent to one year of the EU’s six-year stimulus package and 750 billion euros. .

Le Maire said vaccine delays mean stimulus funds must be delivered to member states without delay.

“Europe must understand that we must act quickly and that the stimulus funds promised to European citizens must now reach the member states … In 2022 or 2023 it will be too late. The Chinese and the Americans will be ahead of us, ”he said.

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Although the 27-nation bloc agreed to the landmark stimulus fund last summer, EU governments are still submitting detailed plans for how they intend to spend the fund’s money, which many have yet to ratify.

Boata said household savings across the EU, which he estimated increased by about 40% to 530 billion euros during the pandemic, could come to the rescue.

“But an acceleration of the deployment of vaccination is needed to ensure that it can be unleashed to inject much-needed life into the eurozone economy,” he said.

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