France’s protests costing into the billions
Finance minister says protests ‘not good for the attractiveness of our country’
PARIS — France’s wave of protests and violence over the past month or so has already cost the Eurozone’s second-largest economy a fortune.
Road blockades, demonstrations and successive weekends of rioting in Paris and other towns have left supermarket shelves empty, stopped shoppers from buying Christmas gifts and scared away tourists.
The government stands to lose out, too, with tax receipts set to be lower than anticipated. Government coffers will be tapped into next year to finance tax relief and other fiscal measures announced Monday by President Emmanuel Macron to placate the “yellow vest” movement, which started as a show of anger against fuel taxes but snowballed into a grab bag of grievances.
Finance Minister Bruno Le Maire says the fallout from the protests, which have seen hundreds of arrests, 1,400 injured and at least five deaths in protestrelated accidents, will shave 0.1 per cent off French economic growth in the last quarter of 2018 and is “not good for the attractiveness of our country.”
The forecast costs emanating from one of France’s most acute crises in more than a decade are already running into the billions.
MACRON’S MEASURES:
The president’s new steps to boost the spending power of retirees and low-paid workers, a shared demand of many yellow vests, include a US$110 hike in the minimum monthly wage and tax relief.
The government says the total bill from its climbdowns so far will be around $11 billion.
That includes Macron’s new measures and a loss from the government no longer levying a carbon tax hike on fossil fuels.
The scope of the measures took even some of Macron’s own ministers by surprise, who hadn’t expected him to loosen the purse strings quite so much.
An estimated 23 million viewers watched Macron’s speech live, more than those who tuned in for France’s victory in soccer’s World Cup final in July.
The government intends to trim costs elsewhere and possibly increase borrowing to finance the handouts which it hopes will encourage protesters to abandon their roadside barricades and stop marching in Paris and other towns.
The government had forecast a budget deficit equivalent to 2.8 per cent of annual GDP for next year, below the three per cent ceiling for the 19 countries that use the euro currency, and so feels that it has a bit of wiggle room.
CHRISTMAS SHOPPING:
For retailers, the protests couldn’t have come at a worse time.
With the protests having closed down city centres and yellowvest blockades of shopping malls, many have opted to buy gifts online rather than run the gauntlet of demonstrations.
The Federation of Commerce and Distribution, an industry group representing many of France’s largest chains, estimates retailers have suffered more than $1.1 billion in lost revenues, with toy, clothing and food sales among the sectors hit. Lost revenues also mean lost sales tax receipts for the government. “People are afraid to go shopping. They are not in a shopping mood right now,” said Gontran Thuring, chief executive of the National Council of Shopping Malls, another industry group.
“It’s a disaster if this holiday season is not successful.”
TOURISM: Tourists brave enough to venture into the centre of Paris last weekend found many sites shut and boutiques closed and barricaded behind plywood. Hardly an enticing advertisement for France’s capital of art, fashion, gastronomy and romance.
The protests and associated violence are taking the shine off what was shaping up as a great year for Parisian hoteliers — visitor numbers were back to levels enjoyed before terror attacks killed 130 people in 2015.
Reservations in Paris hotels are down for December, with an estimated 35,000 nights cancelled so far, market research consultancy MKG says.
FRANCE’S REPUTATION AND OTHER COSTS:
Store owners are replacing shattered windows while city workers have been towing away the hulks of burned-out cars and cleaning anti-government and anti-capitalist graffiti off shops, buildings and world-famous sites like the Arc de Triomphe, which reopens on Wednesday, more than a week after it was vandalized.
Also costly are repairs to traffic radars, another target of protests. They cost tens of thousands of dollars each to replace.
Less quantifiable is the damage done to France’s image and to Macron’s efforts to project the country as a business-friendly country and one that’s open for investment.