The Banque de France no longer believes in 0.9%

Banque de France revises growth downward

If the government looks too optimistic with a growth forecast of 1.4% in France for 2024, the Banque de France is always more cautious. A fair choice: Until now, it was calculating a growth of 0.9% for 2024. And since the government has revised its downwards, now counting on 1%, a forecast still considered optimistic, one would have thought that the Banque de France and the executive were on the same wavelength.

No! In its interim macroeconomic forecasts for March 2024, published on March 12, 2024, the Banque de France once again gave Emmanuel Macron, Gabriel Etel and Bruno Le Maire a cold sweat. The organization now expects growth of 0.8% for 2024, or 0.2% less than Govt. ” New information available leads us to very slightly lower growth in 2024, to 0.8% compared to 0.9% in our previous forecast.

», she writes.

Good news on inflation in France

If growth is revised downward, households will be pleased to know that the Banque de France does not expect inflation to follow the expected path. From the end of 2024, the institute expects it to fall to 2.5% before falling below 2% in 2025 and 2026. In total, core inflation (HICP excluding energy and food) should decline significantly to 2.4% in 2024, before reaching 2.2% and 1.9% in 2025 and 2026, respectively. »

A drop in inflation, and its return to below 2%, however, could boost French growth, especially thanks to consumption. So, although it has lowered its growth forecasts for 2024, the Banque de France offers good news for the coming years. Thanks in particular to the reduction in energy prices, BdF announces “ A repeat of the above GDP growth to 1.5% and 1.7% in 2025 and 2026 respectively (compared to 1.3% and 1.6% in our previous forecast). »

Full employment? The government is completely delirious

Certainly, inflation is improving and growth may pick up again, albeit later than expected. But the government has another objective: full employment. And, to do this, he announced important measures aimed at forcing the unemployed back to work, notably by reducing their unemployment rights.

A trend that may continue.

Except the Banque de France doesn’t believe in it at all. That unemployment in France falls below 5%, considered “full employment”, seems more illusion than reality. ” Due to the transitional decline in employment expected in 2024-2025, From the end of 2024 to the end of 2025, the unemployment rate will increase slightly to approach 7.8%.before resuming its decline in 2026 towards the level we assumed in our December forecast (7.5%). »

Austerity as a Solution: More Budget Cuts?

Low growth, unemployment that is not falling, inflation that is improving… the French economy is giving very mixed signals. But the government seems to be sticking to its position: its primary objective is to reduce public debt and deficit.

This resulted in a budget announced by Gabriel Atal and his ministers, which provides for more than 30 billion euros in savings over two years, including, among other things, certain social benefits. Because the executive refuses to raise taxes or raise taxes on the record profits of big companies. It is difficult to understand when 2023 signed for CAC 40, Third year in a row with more than 140 billion euros in net profit. Which is more than 400 billion in three years.

The Bad: The Court of Auditors, in its annual report, once again marks the government for its strategy and policy. Pierre Moscovici, its president, It is estimated that the announced savings are not enough… and that 50 billion is needed, an unprecedented level. But the latter remains a realist and believes that the question of taxation of superprofits cannot be ruled out when the debt is rising and the public deficit in 2023 has finally proved to be higher than 5% of GDP, against the 4.9% expected by the executive. .