The Montaigne Institute is publishing a note on Friday on how to support business investment over the next eighteen months. The author, economist Eric Chaney, proposes that public finances help companies up to 10% of their annual investments, or around 25 billion euros per year.
This is one of the great difficulties that the French economy will encounter in the coming months. With the coronavirus crisis, health concerns and mechanically consumer fears and therefore a possible drop in demand, companies are likely to drastically reduce their investments. “All companies will face systemic uncertainty about the level of future activity”, points out Eric Chaney, economic advisor of the Montaigne Institute and author of the note “Bounce back from Covid-19: let’s relaunch investment” published this Friday by the liberal think tank.
“Investment amplifies the fall in GDP but it also amplifies the recovery. We will therefore have to support him “, insists the economist. Depending on the scenarios, companies could reduce their investments by 35% to 48% this year compared to last year. Thus, the private investment deficit compared to a theoretical situation in the absence of Covid-19, would represent at the end of 2022 between 200 and 500 billion euros depending on the speed of the recovery. Huge amounts of money that could hamper French competitiveness for years to come.