The progress report from the committee for monitoring and assessing financial support measures for companies faced with the epidemic takes stock of the effectiveness of the measures put in place by the government. The report shows that the aid offered by the government did not create any windfall effects, and limited the impact of the health crisis. Read more.
Aid intensity decreases with company size
The intensity of use of the four measures proposed by the State (partial activity, deferral of social security contributions and charges, solidarity fund, State-guaranteed loans) varies according to company size. In fact, the progress report shows that small companies have mobilized these measures more intensively: VSEs, which account for 20% of total employment, are involved in 56% of the total amount of deferred social contributions, most of the solidarity fund, 27% of partial activity and the volume of PGEs. This is not the case for companies belonging to a group, which account for only 35% of deferred contributions and virtually nothing from the solidarity fund.
In general terms, the Monitoring Committee notes that recourse to these measures is highest for companies in mediocre financial health prior to the crisis. On the other hand, it is lower for those in poor or excellent health.
A reduction in the number of insolvent or failing businesses
The money paid out by the State helped to "cushion the solvency shock associated with the crisis", explains economist Benoît Cœuré, head of the emergency measures monitoring committee, in the columns of the newspaper Les Echos. Simulations carried out by the French Treasury show that the increase in the number of companies becoming insolvent would have been more than 8 percentage points without public support, compared with 3 points with state aid.
Although it is still too early to assess the impact of the emergency measures, the committee already has evidence pointing to a massive effect on the French economy.
What are the possible ways out of the crisis?
Last April, the government assured the social partners that emergency aid cuts would follow the easing of health restrictions.
Regarding Solidarity Fund aid, Bruno Le Maire presented two scenarios: a reduction proportional to the recovery in sales, or a reduction of 25% per month for three months. On the subject of partial activity, Elisabeth Borne confirmed the possibility of a rapid switch to the target scheme for unprotected sectors, and intermediate stages for others. Finally, the official extension of the PGE scheme by six months, until December 31, 2021, met with consensus.
Despite these measures, some economists expect a rebound in business failures as a result of the catch-up effect, which could lead the French government to consider waiving social security and tax debts.