The French government on Tuesday scrapped its days-old economic outlook after President Emmanuel Macron extended a national lockdown, shutting down swathes of the euro zone’s second-biggest economy.
After Macron extended the lockdown until at least May 11, Finance Minister Bruno Le Maire said the economy was now expected to contract 8% this year instead of the 6% flagged as recently as Thursday.
Since March 17, France’s 67 million people have been ordered to stay at home except to buy food, go to work, seek medical care or get some exercise on their own. The lockdown was originally scheduled to end on Tuesday.
The extension would put additional strain on public finances, blowing the public sector budget deficit out to a post-war record of 9% of GDP, up from 7.6% last week, budget minister Gerald Darmanin told France Info.
The government last week more than doubled a package of measures to pull the economy back from the precipice to at least 100 billion euros ($109.32 billion) – over 4% of economic output.
“If we need to do more, then we will do more. We will be there,” Le Maire told BFM TV.
The package allows companies to defer billions of euros of tax and payroll charges to cope with the collapse in business and creates a 7 billion euro solidarity fund for the most fragile small companies, which has already been tapped by 900,000 firms,
With eight million workers on state-subsidised furloughs, the government has increased to budget for that programme to 24 billion euros from 20 billion euros before the extension, Le Maire said.
The government has also pledged to guarantee up to 300 billion euros of business loans from commercial loans to help see companies through the crisis.
Some 150,000 companies have received guarantees worth 22 billion euros and another 40 billion in requests were being treated, the head of the Bpifrance public investment bank, Nicolas Dufourcq, said.
After coming under pressure from the government, French insurers were doubling their contribution to its solidarity fund for small businesses to 400 million euros, Le Maire said. They were offering 500 million euros in client discounts and would set up an investment fund with 1.5 billion euros for small firms.
While banks and insurers had got the message they needed to step up their support of the economy, Le Maire said he would put pressure on big commercial property owners to do more.
“Big property owners can and should do more to help those that can’t pay their rents,” Le Maire said.