French Government Sees Annual Growth at 1.4% From 2024 Onward

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

French economic growth will return to around 1.4% a year as public investment to spur the recovery from the Covid pandemic offsets the damage from a sharp recession, according to long-term government forecasts. 

President Emmanuel Macron's government expects stronger growth rates in the short term as activity catches up with pre-crisis levels around the end of this year. As that surge fades, a 100 billion-euro ($116 billion) stimulus plan should ensure growth potential stabilizes at around 1.35%, a social-economic report published Monday shows. 

The effects of another investment plan, the details of which Macron still hasn't announced, could also support potential growth, according to the report. Inflation is expected to quicken only gradually to plateau at 1.75% from 2025. 

Based on an assumption that public spending growth would be contained at at 0.7% in volume a year, and that taxes will not be increases, as Macron's team has pledged, the government expects debt to begin falling again from 2026.

The pace of fiscal consolidation would be faster than under the previous governments, according to the report. It estimates the volume of public spending rose 1.4% on average during the five-year term of Nicolas Sarkozy and 1% under Macron's predecessor Francois Hollande.

©2021 Bloomberg L.P.

Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.