France won’t raise taxes even with 11% contraction

France won't raise taxes even with the economy suffering a deeper recession than previously expected because of the coronavirus lockdown, finance minister Bruno Le Maire has said.

The contraction this year will amount to 11 per cent, more than the 8 per cent previously predicted. That’s also more than the 9 per cent slump forecast by economists in a Bloomberg survey.

“Today we have taxation that is very heavy, among the highest of all developed economies so good sense is not to increase pressure on French people,” Le Maire said on French radio RTL. “Yes, debt will have to be paid back, but not by raising taxes – by raising growth.”

France imposed one of the Europe’s strictest lockdowns in mid-March and only began removing restrictions on May 11th. Cafes, bars and restaurants were only allowed to reopen for regular business on Tuesday.

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“We were hard hit by the virus, we took effective measures to protect French people’s health but the economy practically ground to a halt for three months,” Le Maire said.

With some 300,000 cafes, bars and restaurants reopening on Tuesday, Le Maire said that they would continue to benefit from hand-outs from a government solidarity fund until the end of the year to help cover fixed costs.

“Even if it is hard to hear on a day when the sun is shining and the cafes are reopening, the hardest part is still ahead of us in social and economic terms,” Le Maire said.

The government is trying to avert a string of retail bankruptcies by seeking buyers for big clothing chains Camaieu, Conforama and La Halle, which employ thousands of people, Le Maire said.

Le Maire has already announced sector-specific support plans for the tourism ad car industries this month. He said measures for the aerospace industry were being prepared for next week and the start-up and building sectors would follow afterwards. – Bloomberg / Reuters