towards a sharp drop in purchasing power, according to the OFCE

towards a sharp drop in purchasing power according to the

In France, the government continues to show some optimism for economic growth in 2022. But according to the OFCE, the purchasing power of the French could decline by 0.8%, despite government measures.

War in Ukraine, supply problems, rising prices, and soon increase in key rates in Europe… The economic shocks are multiple. And facing them, the French Ministry of the Economy continues to rule out the risk of recession for this year. However, the indicators are not looking good.

The French Observatory of Economic Conditions (OFCE) for its part displays more gloomy forecasts, in particular for the purchasing power of the French. In its June note, the OFCE estimates that with inflation averaging 4.9%, the highest rate since November 1985, the purchasing power of French households could contract by 0.8% this year.

The forecasts of the observatory take into account the aid already granted and that promised by the executive for after the legislative elections. Measures which would have the merit of limiting breakage for the most modest households. The 4% increase in social benefits and the potential increase in wages would greatly limit the loss of purchasing power, according to the OFCE.

But caution remains in order for French households. Because there is nothing to be optimistic about the recovery. Growth forecasts for 2022 have been reduced to 2.4% by experts. And the other consequence of these economic difficulties would be a slower recovery in public finances. The OFCE is counting on a reduction in the deficit from 6.5% to 5.6% (against 5% anticipated by the government) and a public debt reduced to 112.1% of GDP (after 112.5% ​​last year). ).

(And with AFP)

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