A mixed picture Conjoncture in France - December 2019
At the international level, 2019 will have been marked by political and economic uncertainties that have weighed down on trade and global growth. However, some of these uncertainties seem to be waning somewhat towards the end of the year, and fears of a global economic downturn are easing.
Through to mid-2020, economic activity in the Eurozone is unlikely to slow down any further or should even accelerate slightly, with domestic demand holding up. French growth is likely to maintain its rate of around +0.3% per quarter; its overhang should reach +0.9% by mid-2020, after +1.3% over 2019 as a whole. The unemployment rate should remain on a downward trend and reach 8.2% by mid-2020.
The cycle of municipal elections: How does it affect public investment, employment and output?
Mikaël Beatriz
Municipal elections in France cover a six-year cycle. Local government bodies (APULs) – which currently account for the majority of public investment – tend to adjust their investment behaviour in part according to the dates of these elections. Using an econometric model, the effect of the electoral cycle can be isolated from other elements that may influence their behaviour (income, activity, long-term factors). It emerges that in the year preceding an election, the pace of annual growth in nominal investment by APULs, all other things being equal, is on average 4 points higher than in previous years, after which there is a backlash effect as it slows in the year of the election and the year after.
APULs invest mainly in construction (buildings, civil engineering and specialised construction). In order to support the additional demand in the run-up to the elections, output and employment in the construction branch have to adjust. Using business tendency surveys in the building construction and civil engineering industries, the effect of the electoral cycle can be quantified for these two aggregates. The models selected here suggest that in the year preceding municipal elections, construction output increases by 2 percentage points more than the usual pace, while payroll employment increases on average with 17,000 more jobs than usual.
In 2020, in the run-up to the March elections and beyond, investment by APULs, output and payroll employment in the construction sector look set to gradually slow. The overall effect of the electoral cycle on changes in these three aggregates is likely to be zero in Q2 2020.
Conjoncture in France
Paru le :17/12/2019