French economy to recover to pre-Covid crisis levels in 2022

The French economy was on course to contract by more than 10% this year, with no recovery to pre-coronavirus crisis levels until 2022, the country's central bank said on Tuesday.

Unemployment was expected to rise to 10.1%, its highest level in four years, before rising to 11.7% in 2021, compared with 8.4% last year. One million jobs are expected to be lost.

The Bank of France said the economy would contract 10.3% this year before rebounding with growth of 6.9% in 2021 and 3.9% in 2022. The forecast could be more optimistic if the virus was brought under control quickly, but a second wave of infections could see a 16% downturn this year followed by growth of 6% in 2021 and 4% in 2022.

Economic activity was still running 17% below normal levels up to the end of May, the bank added, although this was a narrowing from the 32% reduction seen during the first two weeks of lockdown in March.

Business surveys suggested activity could get back to less than 12% of normal levels this month, it added. The strict lockdown imposed by the government indicated a contraction of 15% in the second quarter from the previous three months, when it had already slumped 5.3%.