Just weeks after hugely disruptive protests and strikes over pension reforms in France finally died down, businesses in the country are grappling with the fallout from a week of rioting.
The riots, which were sparked by the fatal shooting of a teenager by a police officer last Tuesday, have already caused more than €1 billion ($1.1 billion) worth of damage, according to a French business association, MEDEF.
Protesters have attacked nearly 400 bank branches and 500 corner shops, French Finance Minister Bruno Le Maire told CNN affiliate BFMTV Wednesday. Speaking to CNN’s Isa Soares Tuesday, Le Maire put the total number of looted stores at 1,000, adding that the businesses were being supported by the government.
But he downplayed the likely impact on the wider French economy. The riots “will not have a deep impact on French growth,” Le Maire said.
The wave of unrest erupted after 17-year-old Nahel Merzouk was shot dead during a traffic stop in a Paris suburb. Protesters in cities across France took to the streets in the days that followed to express their fury over how the country’s marginalized communities are policed and raise questions over whether race was a factor in Merzouk’s death.
French President Emmanuel Macron said Tuesday that he believed the “peak” of the violence had passed, according to CNN affiliate BFMTV. Speaking to the mayors of 241 municipalities that have been gripped by protests, Macron promised his “total support.”
Taxes and social security contributions will be deferred for stores that have been attacked, and canceled altogether for those most affected, Le Maire told BFMTV Wednesday.
Businesses will also have 30 days rather than five to make an insurance claim, he said Tuesday.
Those claims are likely to total less than the €1 billion in estimated damages, according to DBRS Morningstar, a credit ratings agency, suggesting many firms will not be fully compensated for their losses.
“We believe total insured losses for the French insurance industry should remain well below the €1 billion mark,” DBRS Morningstar said Tuesday, noting that the French government bears partial liability for some of the losses.
“Business interruption losses resulting from vandalism, looting and potential curfews are unlikely to be covered by the French state,” the agency added in a note.
More pain to come?
French firms are now bracing themselves for more pain as tourists, spooked by images of violence and chaos across France, decide against traveling to one of the most popular destinations in the world.
As of the beginning of July, foreign tourists have canceled 20-25% of planned trips to Paris, MEDEF President Geoffroy Roux de Bezieux said in an interview with broadcaster France Inter Tuesday.
The disruption comes at a bad time for the French economy, which outperformed the wider euro area in the first few months of this year despite months of protests and strikes as unions demanded the government drop its plan to raise the retirement age from 62 to 64.
But activity has stalled since. Survey data published last week indicated that French output declined in June for the first time this year, and at the fastest pace since February 2021, as the services sector went into reverse and a manufacturing downturn deepened.
— Niamh Kennedy in Dublin and Chris Liakos in Paris contributed reporting.
