France to lose ‘one million jobs’ due to coronavirus crisis

France to lose 'one million jobs' due to coronavirus crisis
Restaurants are among businesses suffering badly from the lockdown. Photo: AFP
France will likely lose "nearly one million" jobs this year, the Bank of France said on Tuesday, as it predicted that the coronavirus pandemic would see the economy shrink by about 10 percent in the same period.

Unemployment will likely pass 11.5 percent in mid-2021, the central bank said, adding that the economy will only recover to pre-crisis levels by mid-2022.

The forecasts are in line with the government's forecast of an 11 percent GDP contraction this year as the country braces for its worse recession since World War II.

Hard hit by the coronavirus pandemic, France imposed a nationwide, strict lockdown from mid-March to mid-May, bringing the country's economy to a virtual standstill for two months.

 

The lockdown had a crushing impact on the national economy, with especially dire consequences for small businesses and self-employed. 

Over-represented in sectors such as the hospitality and hotel industries, they largely depend on people being allowed to leave their homes and travel. 

READ ALSO: The battle in France to save the livelihoods of the self-employed

As the economic wheels have begun turning again, sectors like tourism and restaurant businesses will see a difficult season ahead as many health restrictions remain in place to avoid a resurgence of the number of coronavirus cases.

France's economy shrank 5.3 percent in the first three months of the year, and statistics office Insee has said the contraction could reach 20 percent in the second quarter.

After a slump in output of 15 percent in the three months to June, a “progressive” recovery of the national economy should be seen from the third quarter this year, according to the central bank.

The economy should then expand seven percent in 2021, gaining another four percent in 2022, it said.

“The French economy is recovering quite quickly, (..) but we are far from out of the woods,” François Villeroy de Galhau, governor of the Bank of France, told France Info.

 

 
The outlook remains dependent on many uncertainties, the bank said in its report, and the trade-off between savings and spending will be crucial for the future.
 
“It is likely that the expected increase in unemployment and the highly uncertain global context will continue to weigh on consumer confidence,” it said.
 
As a result, household savings could surge by 22 percent this year while household spending – a key driver of the economy – could fall 9.3 percent, it said.
 
The outlook also depends on that France not entering another round of lockdown, which would harm the country's economy further.

While France has identified 150 coronavirus clusters since it began to ease the lockdown on May 11th, the government's special advisory body has said a new round of nationwide lockdown would be “unlikely” even in the event of a second wave of infections.

READ: No return to lockdown in France, even if there is a second wave, says head of Scientific Council


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