France is the next front in the coronavirus battle France is the next front in the coronavirus battle France is the next front in the coronavirus battle

France is the next front in the coronavirus battle

Christopher Dembik

Head of Macro Analysis

Summary:  To contain the spread of the COVID-19, France might announce a strict quarantine in the next two days and the postponement of the second round of the local election initially scheduled for next Sunday.

France is one of the main European hotspots for the coronavirus pandemic, with 5,423 confirmed cases and 127 deaths. Over the past few days, France has implemented lockdown measures, such as the closure of schools, universities and nearly all shops (at least until April 15) and favoring remote work for all employees This morning, the government confirmed that “the number of affected people double every three days and the situation is deteriorating very quickly”. As part of the population, especially in main cities such as Paris, is not respecting the “social distancing” advice, France might be compelled to implement a strict quarantine for some cities in the next two days. According to most health experts, it would be the only solution to contain the virus and reduce the impact on hospitals and the wider healthcare system. It would mean that the second round of the local election, initially scheduled for next Sunday, would be postponed until further notice. France has probably two to three though weeks ahead.

President Macron had his “Draghi moment”. In his latest speech to the Nation, he confirmed that the government will do “whatever it costs” (mentioned three times) to deal with the crisis. After the contraction in GDP in Q4 2019, France might already be in recession with output falling more than in 2008/09. The following measures has already been taken:

  • Public credit guarantee scheme for SMEs, for about €3 billion.
  • Partial unemployment scheme, for about €15 to 20 billion if the crisis lasts longer than one month.
  • Tax and social contribution deferral, that would represents around €15 to 20 billion.

Under pressure from the government, banks also announced a six-month moratorium on loan repayments for businesses.

The total size of the package is estimated to be between €30 to 40 billion by the French government, which is about 1% of annual GDP. However, it is likely insufficient to tackle the economic crisis.

Most businesses are not ready to face the current situation. For those with a contingency plan, the most extreme scenario is usually a 10-20% hit to revenue. Given the sudden economic stop, it may reach 75% to 90%. A major difference with other crisis is that it is broad-based. Not a single economic sector is spared by the COVID-19 and its consequences. In times of recession, it is estimated that around 60% to 70% of businesses are affected. The current crisis affects almost 100% of companies, particularly in countries where containment measures have been put in place, such as France.

Most observers estimate that financial difficulties for small businesses could rise two to three months after the COVID-19 outbreak if conditions fail to normalize. We are already one month into the crisis and, given the recent lockdown measures, it may last at least until mid- or end of April. It means that many small businesses may face cash flow problems and risk of bankruptcies in April/May if the government does not bailout SMEs.

At this stage, a bigger package that could push the total stimulus above €100 billion is almost unavoidable. It could include business tax cuts with immediate effect on activity, a small businesses’ solidarity fund of tens of billions of euros and demand-oriented measures. In a second step, fiscal stimulus could consist in higher public investment. It usually has the longest lag between the implementation and the impact on business activity, but it can provide more visibility to companies regarding their order books for the forthcoming quarters.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged foreign exchange trading); Type 4 Regulated Activity (Advising on securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.