The end of confinement is unlikely to be a return to the old “normal”, let alone universal. This new-found freedom will take different forms in different countries, regions and business sectors, which are opening up in different ways and at different speeds.
How can companies navigate this difficult environment over the next few weeks, now that restrictions have been eased and a gradual recovery is possible? The eagerness to rebuild is naturally legitimate, as are the questions that a return to business raises. What is the most plausible trajectory for France’s recovery?
A. Production rebounds in a Z-shape to make up for the drop in output before returning to the previous trend,Z-shape scenario
B. Form V would show a re-commitment of frozen spending with no drop in economic variables…Form V scenario
However, OFCE shows that capacity utilization was already higher than average before the pandemic. In addition, a contraction in income, spending and investment is anticipated, which also contradicts the V scenario.
In short, an L+ scenario seems more likely, as forecasts in France point to a 10-15% slowdown in hourly productivity in industry, construction, distribution and catering…
Finally, in the words of “The Conversation – Bernard Guilhon – Pr de Sciences Eco à la Skema Business School – Juin 2020”, a waste of human capital is to be feared in addition, as 20% of companies believe they will be forced to lay off staff in the coming months.
A structural effect in L+ therefore seems the most relevant. Time will tell.
