French cafés reopen today but economy still set for huge tumble

The French economy is set to contract 11% this year due to the coronavirus crisis and more hard days lie ahead until things bounce back next year, Finance Minister Bruno Le Maire has said.
French cafés reopen today but economy still set for huge tumble

The French economy is set to contract 11% this year due to the coronavirus crisis and more hard days lie ahead until things bounce back next year, Finance Minister Bruno Le Maire has said.

France imposed one of the Europe’s strictest lockdowns in mid-March and only began removing restrictions on May 11. Cafes, bars and restaurants were only allowed to reopen for regular business today.

“We were hard hit by the virus, we took effective measures to protect French people’s health but the economy practically ground to a halt for three months,” Mr Le Maire told RTL radio.

“We’re going to pay for it with growth,” he said, adding that a budget update being prepared would forecast a contraction of 11% versus one of 8% forecast previously.

With some 300,000 cafes, bars, and restaurants reopening, Mr Le Maire said that they would continue to benefit from handouts from a government solidarity fund until the end of the year to help cover fixed costs.

“Even if it is hard to hear on a day when the sun is shining and the cafes are reopening, the hardest part is still ahead of us in social and economic terms,” he said.

Meanwhile, Britain’s house prices fell by the most in more than 11 years in May as the coronavirus crisis hammered the market, UK mortgage lender Nationwide said.

Nationwide said prices fell by 1.7% last month from April, the biggest monthly decline since February 2009.

In annual terms, prices rose by 1.8%, slowing from 3.7% in April.

The British government relaxed some of its restrictions on the housing market in England in May.

Property website Rightmove said over the weekend it had its busiest day on record last week, suggesting activity was picking up.

But Nationwide said the medium-term outlook remained highly uncertain.

Samuel Tombs, economist with Pantheon Macroeconomics, said the May fall was probably just the start of a slide in house prices over the rest of this year.

“The huge size of the blow from Covid-19 to households’ incomes and the deterioration in consumers’ confidence suggests that house prices must drop,” he said.

“We look for a 5% decline in prices by the end of the third quarter.”

Nationwide said the impact of the pandemic on the mindset of home buyers was likely to weigh on the market.

A survey it conducted suggested people had put off moving as a result of the lock down and would-be buyers were planning to wait six months on average.

Nationwide said official tax data showed residential property transactions were down by an annual 53% in April.

“Nevertheless, our ability to generate the house price index has not been impacted to date,” it said.

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