Magnificent images, a beautiful basket of medals, an unrecognisable Paris and, to finish on a high note, three tenths of a point of growth. The “legacy” of the Olympic and Paralympic Games, whose curtain fell on Sunday 8 September, is also at stake at the economic level: INSEE estimates that gross domestic product (GDP) growth will be 0.4% in the third quarter (including 0.3 points from ticket sales for the events and television rights). With this sporting boost gone, the fourth quarter looks negative, at -0.1%. Overall, after an increase of 0.2% in each of the first two quarters, the French economy should grow by 1.1% in 2024, the statistics institute said on Monday 9 September.
After a summer of political uncertainty, the start of the school year is therefore slow, 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, where the two key sectors, aeronautics and naval, continue their recovery after the crisis caused by Covid-19; and public spending, on the other hand, “the only source of dynamism in domestic demand”, stresses Dorian Roucher, head of the economic situation department at INSEE.
Under these conditions, future budgetary decisions will have a significant impact on growth scenarios for the coming months. Given the new deterioration in the deficit announced at the beginning of September by Bercy (it now stands at 5.6% of gross domestic product, GDP), a correction of the budgetary path seems inevitable.
“Households remain cautious”
The recovery of public finances can take two forms: a reduction in certain expenditure or an increase in taxes, for example an increase in VAT, CSG or the reintroduction of wealth tax. A weapon to be handled (and aimed) with caution. Because, more than ever, the behaviour of households will be at the heart of economic equations. “The recovery of consumption is very delayedMr Roucher acknowledges. Households remain cautious and the savings rate continues to rise. »
This is also one of the reasons for the budgetary slippage, as Eric Heyer, director of the analysis and forecasting department of the French Observatory of Economic Conditions (OFCE), pointed out on France Inter on Saturday 7 September: “We have had a growth [au premier semestre]but not of good naturehe explained. The government expected more consumption and less exports: this translates into much less VAT revenue. »
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