French economy - Accounts and files2014 Edition
“French economy - Accounts and files” presents every year a summary of the evolutions of French and international economies. Based on national accounts, this book analyses the main events which happened in 2013.
French household consumption since 2009: role of the fiscal and social system
Over the period 2008-2013, the growth in household consumption diverged fairly significantly from that of the purchasing power of income; first of all downwards until 2009, then upwards. Two possible explanations are examined, linked directly to the great recession and its consequences in terms of public finances. The first, related to the composition of household income, is not conclusive. Some forms of income did increase, primarily benefits and especially unemployment benefit, while others decreased, such as the income of self-employed workers; and the share of these two incomes devoted to consumption differs. This change could explain in part the disconnect between consumption and purchasing power, but the impact measured for this “structural effect” does not bring down the difference between observed consumption and explained consumption. The second explanation concerns the influence that fiscal policy could have had, with a sharp rise in public deficit in 2009, linked with stimulus plans put in place at the height of the crisis, and the gradual recovery of public finances that has got underway since then. According to estimates, this factor could account for some of the changes in consumption over recent years. Given the rise in the general government balance, consumption should have seen a slight temporary increase. The unexpectedly weak consumption in 2009 could therefore be due to the distinct deterioration in public finances during that year. These results could also reflect the adjustment of precautionary savings to the specific economic situation during this period and the high level of uncertainty surrounding the trajectory of the French economy after the 2009 recession.