François Villeroy de Galhau: Making the post-Covid era a success for the French and European economy

Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Association Dauphine Discussion Débat / House of Finance, Paris, 18 January 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and gentlemen, dear teachers and students,

I am very happy to be with you again today, in this very important place of teaching and knowledge. I had the honour of speaking here in January 2020, on the then much disputed question of low interest rates. Two months later, the Covid crisis erupted, which not only rebuilt the consensus on these low rates, but also called into question all our forecasts and many of our common points of reference. Since then, we have been living under the continuous pressure of an emergency situation, in a permanent present that masks our structural challenges. I understand and share the suffering. But one day, we will overcome for once and for all this Covid ordeal: this is both an obvious wish for this new year, and a necessity. It is time for us to talk at last about the fundamental choices for Europe and for our country, and to do so, we must take a longer-term view.

I.    A perspective that must go beyond the short term

As regards the short-term economic situation, I will therefore just make three remarks:

a) The French economy is currently proving resilient to Omicron and to the fifth Covid wave. Each of our monthly surveys confirms this, including that of the beginning of January: GDP has returned to its pre-Covid level since last August, earlier than expected and earlier than our European neighbours; the fifth health wave should not prevent significant growth in 2022, i.e. 3.6% in our forecast. The French economy should therefore return to its previous growth path by 2023 and Covid should leave few scars on the French economic fabric.  Overall, the Covid crisis has been well managed economically by the public authorities. These very successes justify firmly resisting today a return to "whatever it takes": entrepreneurs are not meant to be subsidised for life.