Inflation will remain high in France until the end of 2023, “oscillating between 5.5% and 6.5%”, and then it should fall back to around 3% by the end of 2024, the OFCE said Thursday in its outlook economic. As a result of this price increase, the purchasing power of households should fall by 1.2% between 2022 and 2024, projects the French Observatory of Economic Conditions.
Indeed, “the increase in nominal wages is not enough to offset the increase in the consumer price index,” which leads to a drop in purchasing power “despite the fiscal measures deployed” by the government, such as the reduction of housing tax or the abolition of the audiovisual license fee, explained Mathieu Plane, deputy director of the OFCE’s analysis and forecasts department, at a press conference.
Consequently, “a decoupling appears between, on the one hand, the behavior of companies that invest, replace and rent, and, on the other, households that reduce their consumption and investments to cope with their decline in purchasing power”. notes the observatory in your note.
Weak growth and rising unemployment
The growth of the French economy would be limited to 0.8%, according to the OFCE, somewhat less than the 1% forecast by the Government. In 2024, it would rebound to 1.2%. Although growth continues to be supported by domestic demand, it is weighed down by foreign trade, whose deficit broke a record in 2022.
This shortfall, more than half of which is due to high energy prices, translates into a “nation’s current financing requirement,” which is “at a historically high level, comparable to the second quarter of 2020.” , at the time of the first confinement, or that of 1982, before the rigorous shift ”, the researchers point out.
Finally, the OFCE expects unemployment to increase, which should go from the current 7.2% to 7.9% by the end of 2024, “with the drop in learning and the increase in working hours”, which has decreased since the crisis sanitary. Currently, the labor market is surprisingly strong, with one million jobs created in France since 2019.
Of this figure, 70% of the jobs created are due to the massive development of apprenticeships, the effects of public measures to support companies and the reduction in working hours, with persistent partial unemployment in certain electro-intensive industries such as the metallurgical About 30% of the million jobs remain unexplained, according to the OFCE.
Source: BFM TV
