Magnificent images, a nice basket of medals, an unrecognizable Paris and, to close in style, three tenths of a point of growth. The “legacy” of the Olympic and Paralympic Games, on which the curtain fell on Sunday, September 8, is also being played out on the economic level: the National Institute of Statistics and Economic Studies (INSEE) estimates that growth in gross domestic product (GDP) will be 0.4% in the third quarter (of which 0.3 points are attributable to ticket sales for the events and television rights). With this sporting boost gone, the fourth quarter is expected to be negative, at -0.1%. In total, after an increase of 0.2% in each of the first two quarters, the French economy should grow by 1.1% in 2024, INSEE indicated on Monday, September 9.
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After a summer of political uncertainty, the start of the school year is therefore playing out in a sluggish mode, both in terms of consumption and investment. Growth, since the beginning of the year, has come mainly from two areas: foreign trade on the one hand, with the two key sectors of aeronautics and naval continuing to catch up after the Covid-19 slump; and public spending on the other hand, “the only source of dynamism of domestic demand”, underlines Dorian Roucher, head of the economic situation department at INSEE.
Under these conditions, the upcoming budgetary choices will weigh heavily on the growth scenarios for the coming months. Given the new deterioration in the public deficit announced at the beginning of September by Bercy (this has now reached 5.6% of gross domestic product, GDP), a correction of the budgetary trajectory appears inevitable.
“Households remain cautious”
The recovery of public accounts can take two forms: a reduction in certain expenditure or an increase in taxation, for example, an increase in VAT, the general social contribution (CSG), or the reintroduction of the wealth tax. A weapon to be wielded – and targeted – with caution. Because, more than ever, household behavior will be at the heart of economic equations. “The recovery in consumption is slow in comingrecognizes Dorian Roucher. Households remain cautious, and the savings rate continues to increase.
This is one of the reasons, moreover, for the budgetary slippage, as Eric Heyer, director of the analysis and forecasts department of the French Economic Observatory (OFCE), recalled on France Inter on Saturday, September 7: “We have had growth [au premier semestre]but not of the good naturehe explained. The government expected more consumption and fewer exports: this translates into much less VAT revenue. »
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