How is this crisis different from that of 2008?
Ten years ago, we were facing a financial crisis when the current crisis is first of all deeply human and affects the real economy. The virus of the day was called subprime and it spread from American banks to the rest of the financial world. The urgency then was to maintain credit in a world which, deprived of liquidity, risked thrombosis. Today, banks are rather the solution from this point of view. Two lessons from the 2008 crisis are interesting: Europe has managed to agree on a solid response and has been able to clean up its financial system. The second lesson is that getting back to normal takes time. It took ten years to regain pre-crisis purchasing power.
What about emergency measures to support the economy?
They are well adapted and I voted for them. The Republicans made common sense proposals that were first rejected and then finally implemented, such as the expansion of the solidarity fund. To the extent that the economy as a whole is at a standstill today, public income must be substituted for private income. The partial unemployment measure, which had worked rather well in Germany during the last crisis, is necessary: it is a kind of temporary nationalization of wages which makes it possible not to break employment contracts and facilitates recovery. But it’s extremely expensive in the short term.
Is this plan flawless?
The public guarantee of 300 billion euros provided by the State for cash loans is a good measure, up to the stakes, but poorly constructed. As drafted, it does not allow banks not to include the 90% guaranteed by the State in their prudential ratios. All of this may seem technical, but the result could result in slowing down the distribution of credit by the banks. I call on the government to clarify this point and quickly find a solution.
The government has planned 45 billion in aid. Is it sufficient ?
We are already far beyond! Bruno Le Maire admits this when he says that other amending finance laws will be needed. The budgetary cost of this crisis will no doubt be 3 to 5 points of GDP, that is to say between 75 and 120 billion euros. These are dizzying figures. No one thinks that we will escape a deep recession, more severe than in 2009 – GDP then fell by 3 points. According to economists’ estimates, we will be more than double, notably more than 6%. For the public deficit, it will also exceed that of 2009, and will undoubtedly be higher than 7%, much more than the level of 3.9% anticipated by Bercy. Obviously, everything that is put in place to support our economy is necessary, but it is a pity that our country has not been able to rebuild its financial margins in good weather to better resist such a violent crisis.
Who will pay the bill?
Everyone, states first. With us, as with others, this will translate into an increase in public debt. Raising taxes would be a very bad solution. The government did it in 2011, it had slowed the recovery, especially in an over-taxed country like France. For the moment, it is the central banks that are massively injecting liquidity. But it can’t go on forever. The ECB will have to find a balanced position. The best way to pay the bill and absorb the excess liquidity is through increased demand and therefore growth. The French state will have to think about ways to slow down its spending and reallocate it, which is not contradictory. Responsible fiscal policies should not be put in the basket, as is demonstrated by the fact that Germany is systematically doing better than the others.
But how do you get the economy going after such a shock?
The state will have to slowly and gradually withdraw policies in support of a “seized” economic apparatus, which will take time to recover. This is especially true for short-time working. Too quick a disengagement would cause bankruptcy and deflation. It will also be necessary to give up part of the tax and social claims which have been carried over. We should not dream of a resumption of activity that would resemble the waking of marmots after hibernation. On the contrary, it will be slow and complex. This is also why we must think about a recovery plan now and coordinate it with the whole of Europe. Crises are indicative of our weaknesses. We should collectively make this human crisis a moment of European political rebound, where solidarity takes over. We must draw the world of tomorrow. When the president talks about sovereignty, he is right. However, globalization must not be thrown away with bathwater; it must be made to evolve in order to respond to the pandemic, ecological and digital challenges that are global. We will have to organize a G20 and above all a post-crisis European Council and prepare for the overhaul of our treaties to create greater European sovereignty and reshape our global economic exchanges.