France: From controlling the virus to living with it

In the second chart, we have plotted electricity consumption level in 2020 and the evolution over the same period last year. As it is an intermediate consumption intensively used by companies, it allow us to assess in real time the state of the production process. Based on the latest statistics, electricity consumption remains 15% below the 2019 August level, confirming that the level of production, especially in the industrial sector, is not back to normal yet.

The observed stabilization in economic rebound is not only happening in France but also in almost all the countries that experience further virus spread. A higher number of Covid cases was expected following the lift of the lockdown but the latest official figures suggest that France is about to enter into risk-zone again. Since June 1, the number of fatalities is almost close to zero, but the number of confirmed cases has been surging fast, reaching its highest weekly level since the end of April. According to the Prime Minister, on average 25 new clusters are discovered per day nowadays compared to 5 clusters three weeks ago. Further social distancing measures have been implemented at local level in 90% of the biggest cities, such as mandatory mask-wearing in crowded streets, and the government is weighting the pros and cons of mandatory mask-wearing in working places from September as well.

France has to race against time in order to contain the virus spread before the start of the seasonal flu, which usually increases pressure on the health system. In case of failure, the risk is that the health system won’t have the capacity to simultaneously deal with Covid and flu, thus forcing authorities to resort to more drastic social distancing measures (i.e. localized lockdown, restrictions to transport etc.) that would ultimately cause severe economic disruptions again and probably translate into slow GDP rebound in Q3 and a relapse in Q4.