Political uncertainty after legislative elections threatens progress | EUROtoday

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In regular instances, financial forecasts are already a fragile train. But within the aftermath of an unprecedented election outcome, with a National Assembly the place no majority is rising, the work turns into notably perilous. The INSEE, which is publishing its quarterly financial report on Tuesday, July 9, acknowledges this with out hesitation. Dorian Roucher, the top of the financial scenario division, mentions a “major hazard”. “This note was prepared in a particular context”he emphasizes.

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These forecasts have been initially scheduled to be revealed in mid-June. They have been postponed to keep away from political interference in the course of the legislative election marketing campaign. But they’re nonetheless ready with information collected not solely earlier than the results of the second spherical, however for essentially the most half, even earlier than the announcement of the dissolution on June 9.

In the previous, family consumption has tended to rebound after elections. But this time? Will uncertainties encourage the French to be extra cautious? As for companies, they might be tempted to postpone their investments, whereas taxation might change within the brief time period. Bruno Le Maire clearly acknowledges this: “The dissolution has created uncertainty. Uncertainty is never good for the economy. Many companies are hesitant and waiting to see what the political outcome will be [qui vont découler de l’élection]. » The Minister of the Economy, whose personal future is in doubt, took the opportunity to issue a warning: “The supply-side coverage that we’ve got been pursuing for seven years is producing outcomes. Returning to the demand-side coverage, 1981 to the facility of 10, could be an irremediable error.”

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Moreover, the slight tensions in recent weeks on French interest rates add to the difficulties. “Since June 9, volatility has elevated on the monetary markets, suggesting that an uncertainty impact is probably at work, prone to generate a type of wait-and-see angle”writes INSEE.

Light bounce

On this very fragile forecast basis, INSEE predicts a slight rebound in growth in France, after the near-stagnation of the second half of 2023. The explanation comes above all from the slowdown in inflation, currently at 2.1%, which should finally give households a little breathing space.

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Overall, growth is expected to be 1.1% this year. That is exactly the same level as last year, but the 2023 figure was misleading: the full reopening of nuclear power plants alone contributed 0.5 percentage points of growth. “This obvious stability [de la croissance entre 2023 et 2024] truly hides an acceleration motion”notes INSEE.

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https://www.lemonde.fr/economie/article/2024/07/09/l-incertitude-politique-apres-les-legislatives-menace-la-croissance_6248241_3234.html