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The 100 billion recovery plan failed to counter the decline in French productivity

It’s a well-run affair.

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The 100 billion recovery plan failed to counter the decline in French productivity

It’s a well-run affair. Presented in September 2020 and with a budget of 100 billion euros, the vast French recovery plan was deployed effectively. At the end of November 2023, the plan's disbursement rate stood at 73%, according to the plan's evaluation committee, which published its new report on Tuesday. The economists in charge of this evaluation note that “the envelopes and the forecast pace of disbursement of the recovery plan have been well respected; the territorial distribution is balanced; the targeting of schemes is encouraging in several cases, for example with the gains for industry via the reduction in production taxes, or the targeting of low-income households via MaPrimeRénov'.

This is undoubtedly the first time in its history that Bercy has deployed a plan of such magnitude so quickly. In terms of implementation, success therefore appears clear. Was this 100 billion spent wisely? The answer is not simple because the plan covered more than 100 measures of all kinds, including the reduction in production taxes (for 10 billion euros). The plan's evaluation committee, which works within the framework of France Stratégie, therefore focused on a few major measures with quantifiable effects.

On the employment side, the committee relied on the evaluation of the French Observatory of Economic Conditions (OFCE), which estimated that the recovery plan had created 350,000 jobs in 2022, thanks to measures in favor of aid for learning and support for building renovation. The exceptional aid for apprenticeship would have made it possible to create 200,000 jobs in 2021 and 2022 for an average budgetary cost of 20,000 euros per job, “which corresponds to the lower limit of what can be found in the policies of the "employment deployed in France", according to Cédric Audenis, interim general commissioner of France Stratégie.

The support systems for the decarbonization of industry and the automobile bonus have also served their purpose. According to the Institute of Public Policy (IPP), the automobile bonus alone would explain 40% of the increase in “the market share of electric vehicles”. Decarbonization aid would have saved 4.5 million tonnes of CO2. Taking into account windfall effects, the budgetary cost would then be around 19 euros per tonne of CO2 avoided.

The MaPrim’Renov’ housing renovation system has been popular with individuals. On the other hand, it struggles to trigger large-scale renovations since only 27% of files include at least two actions. Above all, 4% of renovations concern collective housing. The subsidy for the work would have made it possible to reduce CO2 emissions by 70 euros per tonne of CO2 avoided. “It is a relatively low cost, even if it neglects the rebound effect, i.e. the fact that households tend to heat themselves more once the renovations are carried out,” said economist Xavier Jaravel, president of the committee. 'assessment.

The cost of renovating public buildings, on the other hand, reaches 700 euros per tonne of CO2 saved. “These figures give an idea of ​​the overall cost of decarbonizing the economy,” explained Xavier Jaravel. Our point is not to encourage only the least costly measures to be carried out because the economy as a whole must be transformed, but it is important to measure these cost divergences.”

From a macroeconomic point of view, according to the OFCE, in 2022, the plan contributed 1.4 points of gross domestic product (GDP). After the shock of the cessation of activity in 2020, the measures should allow France to return to the pre-crisis level of gross domestic product (GDP) in the summer of 2022. The objective was achieved, ahead of schedule. “France was one of the first major economies to return to its pre-crisis level of activity,” said Sylvie Montout, budget rapporteur. The plan's contribution to this rebound, however, appears to be in the minority. In the medium term, its effect also seems to fade. “In the third quarter of 2023, French GDP stands at 1.8% above its level in the fourth quarter of 2019, compared to 2.3% for the euro zone,” supports the evaluation committee.

More worrying, according to the latest data, the plan, despite its undeniable successes, has not been able to counter the great weakness of the French economy: the fall in its productivity. “We do not yet know the trend part of this development, but the measures to support investment and competitiveness of the France Recovery plan do not seem to be able, on their own, to counter it,” says the report. Among the “points of vigilance” put forward, the evaluation committee underlines that “industry modernization measures have not been used for investments in the most recent technologies”.

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