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ECONOMY

‘Clearance sale’: French MPs give lift off to privatisation of Paris airports

French lawmakers on Thursday gave a green light for the privatisation of three Paris airports, part of President Emmanuel Macron's plan to fund innovation and pay down debt.

'Clearance sale': French MPs give lift off to privatisation of Paris airports
AFP

French lawmakers on Thursday gave a green light for the privatisation of three Paris airports, part of President Emmanuel Macron's plan to fund innovation and pay down debt.

Opposition parties have cried foul over the government's plans to sell all or part of its stake in the operator of the Charles de Gaulle, Orly and Le Bourget airports, accusing it of selling off strategic assets.

But a bill allowing the state to give up its majority stake sailed through a near-empty National Assembly, with 39 voting in favour to seven against.

The French state owns 50.63 percent of the shares in Aeroports de Paris (ADP), one of the world's biggest airport operators in terms of passenger numbers.

Macron, a former investment banker, wants to invest the proceeds of the sale in an innovation fund — a key campaign promise —  and reduce the public debt, which stood at 99 percent of gross domestic product (GDP) in the second quarter.

MPs also voted Thursday to privatise the lottery and scratch-cards monopoly Francaise des Jeux, on condition that the state retain a minimum 20-per-cent shareholding.

The government also plans to reduce the state's stake in energy group Engie.

Altogether the centrist government hopes to raise 10 billion euros ($11.5 billion), the bulk of which would go towards investment in artificial intelligence, automation and other new technologies

“We want to change from a dividends approach to one of investing in the future,” Economy Minister Bruno Le Maire told lawmakers Wednesday, adding that 
the state would award a 70-year concession to run the airports according to “strict terms, notably concerning tariffs.”

'Clearance sale'

Opposition lawmakers on both the left and right have accused the government of selling off state jewels.

“It feels like a big clearance sale of the nation's assets,” Philippe Gosselin of the rightwing Republicans said.

In the last 20 years, several leading French companies have fallen into private hands.

They include France Telecom, Air France, the bank Credit Lyonnais and the Saint-Nazaire shipyards in western France.

While the main aim of the new wave of asset sales is to free up funds to promote innovation, the government is also anxious to trim its borrowing needs.

The public debt amounted to 99 percent of GDP in the second quarter, compared with a first-quarter eurozone average of 86.8 percent.

EU members are supposed to respect a limit of 60 percent of GDP.

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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