Rise in energy prices: the State assumed more than half of the shock

Posted 8 Dec. 2022 at 7:24Updated 8 Dec. 2022 at 7:57 am

The rise in energy prices and the depreciation of the euro have led to a rather unprecedented deterioration in the terms of trade for foreign trade in France in 2022. In other words: import prices have increased much faster than those of exports.

Without changing behavior, this would have resulted in a loss of around 3 points of GDP compared to 2019 – i.e. 85 billion euros deducted in some way from the French economy, according to a study published this Wednesday by the Directorate General of the Treasury. . “This estimate is subject to great uncertainty, if only because of the volatility of oil and gas prices,” admits the author of the note, Guillaume Clavéres.

According to French Customs, the loss was actually closer to 2.5 points of GDP due to lower import volumes. Taking into account the repercussions of price increases by exporting companies, it is even possible that it was even more limited.

41 billion euros in public support

Faced with an energy crisis on an unprecedented scale, the State assumed more than half of the loss of real income – 52% exactly – caused by the surge in gas and oil prices by multiplying the support mechanisms for households and businesses.

Tariff shield on gas and electricity prices, rebate on prices at the pump, exceptional cheque, revaluation of social benefits and pensions: in total, 40.8 billion euros of public money have been put on Table. Taking all these measures into account, households would ultimately bear only 6% of aggregate losses, and businesses 42%. The latter, however, have “the ability to partly pass on input price increases to consumers”, recalls the study.

In the absence of public support, businesses and households would have been much more taxed: the former would have suffered 59% of the 85 billion euros in losses linked to the rise in gas and oil prices, while seconds would have carried 37% of the shock. On the other hand, the burden for general government would have been limited to 4%.

“Compensation cannot be permanent”

The Directorate General of the Treasury recognizes that the measures adopted have had the advantage of limiting inflation in France, and protecting the purchasing power of households as well as the productive fabric. However, it recommends adding “effective sobriety measures so as not to block the adjustment of consumption”.

Above all, she is concerned about the high cost to public finances of the policy carried out, such as the International Monetary Fund recently. According to her, it is time for the State to change the distribution of the cost between the other economic agents: “Funded today by debt, the measures taken transfer the cost of the energy bill to the following generations. If a smoothing over time is justified given the magnitude of the shock, the compensation cannot be permanent. »

The government has also ended up reviewing its strategy: next January, a new version of the less generous tariff shield will be launched, and a new compensation targeted at workers will also see the light of day to replace the discount at the pump.

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