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Countries around the world are facing economic turmoil due to the pandemic but Minister of the Economy Bruno le Maire has issued a bleak warning for France’s economic recovery, claiming it will take a staggering 20 years to pay off the debt.
He told France Inter: “We estimate 20 years to repay the Covid debt.”
But despite the country facing years of financial debt, the Minister has vowed not to increase taxes “as long as I am minister” but instead rely on savings made by structural reforms.
He continued: “We must remain responsible for public finances.
“Structural reforms which will allow us to be efficient.”
In particular, he referred to the “pension reforms” which remain his top priority.
France’s debt is set to approach 120 percent of GDP this year against 114 percent in June.
However, politician Arnaud Montebourg has called for the outright cancellation of the debt.
He said: “If anyone can tell me how we’re going to pay off $500 billion in extra debt, or seven times the annual income tax revenue, it’s impossible and we can’t do it without backlashes and revolts.”
Mr Montebourg urged for the debts of all countries within the eurozone to be cancelled and a “massive takeover by the European Central Bank”.
At the end of October, Mr le Maire reassured the public the country will be able to “bounce back very quickly and to accelerate the transformation of the French economy to make it more competitive”.
On Wednesday, the Minister announced a new scheme to help support businesses during the pandemic.
The new support will compensate up to 20 perfect of turnover for businesses which remain closed and will cost the state 1.6billion euros per month.
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He said: “We are completely changing the system to be able to help not only the smallest businesses, but all businesses, without exception, which are closed.”
The Minister also revealed he was in favour of shops opening every Sunday in the run-up to Christmas in order for “traders to be able to catch up with their turnover”.
In March, Brussels agreed to pause the EU’s debt and deficit rules through at least next year due to the coronavirus pandemic.
But earlier this month, Valdis Dombrovskis, executive vice president of the Commission, warned countries need to be aware of how much debt they are taking on.
He said: “We need targeted and temporary fiscal support measures, as well as well-chosen reforms and investments that will drive a fair, inclusive and sustainable recovery.”
In the statement, countries like France, Belgium, Greece, Italy, Spain and Portugal were urged to be especially careful due to their high debts before the virus hit.
The Commission added France, Italy, Lithuania and Slovakia should ensure some of their pandemic-battling policies are temporary otherwise risk having unsustainable public finances.
In the UK, Chancellor Rishi Sunak warned signs of economic normality will not be visible until 2022.
Mr Sunak said: “The Office of Budget Responsibility (OBR) forecast the economy will contract this year by 11.3 percent, the largest fall in output for more than 300 years.
“As the restrictions are eased, we expect the economy to start recovering, growing by 5.5 percent next year, and 6.6 percent in 2022, then 2.3, 1.7 and 1.8 percent in the following years.
“Even with growth returning, our economic output is not expected to return to pre-crisis level until the fourth quarter of 2022.
“And the economic damage is likely to be lasting. Long-time scarring means in 2025, the economy will be around 3 percent smaller than expected in the March Budget.”
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