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Wed, Feb 04, 2009 - Page 10 News List

French PM unveils multibillion-euro stimulus plan to bolster the economy

DRASTIC MEASURES Around 870 million euros will be pumped into transport and 730 million euros into research and universities as part of the 26.5 billion-euro scheme


French Prime Minister Francois Fillon on Monday unveiled details of a multibillion-euro stimulus plan, but admitted it would not shield France’s economy from recession.

French President Nicolas Sarkozy’s government is under pressure to show how the 26.5 billion euro (US$33 billion) package adopted by parliament last week will cushion ordinary workers from the slowdown.

Unions and the left-wing opposition are already clamoring for a second recovery plan to boost consumer spending by hiking pensions and salaries.


Four days after more than 1 million angry strikers marched to demand a state action, Fillon and 18 ministers boarded a high-speed train dubbed the “Recovery Express” to defend the plan in Lyon.

“I know that our country is gripped by doubt, by fears, by protests,” Fillon told a press conference in France’s third-biggest city, as the economy ministry announced a new raft of grim news on jobs and growth.

“We are going to fund concrete projects that support business, create work for our companies, that protect jobs,” he said, as he unveiled a list of 1,000 public works projects to benefit from state funds.

Some 870 million euros will be pumped into transport, 730 million euros into research and universities, 620 million euros into culture and heritage renovation work and 1.1 billion euros into building and renovating public housing.

The stimulus plan also includes some 1.3 billion euros in aid and hiring subsidies for small businesses, as well as 220 million euros in bonus payments to scrap polluting cars.


Several billion more are spread across dozens of small-scale projects, from energy-efficient farming to boosting security in mental hospitals — with planned investments pulled forward to the period of this year to next year.

Split into three categories, the French stimulus plan includes 11.1 billion euros of direct state investment and 4 billion euros of investment by state-owned energy and transport firms.

Another 11.4 billion euros will come in the form of treasury facilities to help improve business cash flow.

Sarkozy’s specially appointed “Recovery Minister,” Patrick Devedjian, told reporters that 10 billion euros would be rolled out “starting this week.”

But the opposition Socialist Party dismissed the government’s announcements as “a load of hot air with little results.”

“The state is simply ... dressing up old spending as new,” said Michel Sapin, the Socialist spokesman on economic affairs.

Speaking in Lyon, Fillon conceded that the stimulus plan would not be enough to shield the French economy, which the IMF expects to shrink by about 1.9 percent this year.

French unemployment figures jumped by 45,800 in December to 2.11 million jobless, official figures showed on Monday, an 11.4 percent increase over a year.

“France is no exception to a trend that is affecting the whole of the world,” Fillon said. “What we hope is that the measures we are now taking will help France to improve its outlook compared to these forecasts.”

French Finance Minister Christine Lagarde was more explicit.

“All the countries of the eurozone will be at about minus 2” percent growth this year, she said. “We shouldn’t have any illusions.”


In an echo of this message, French car makers — whose sector directly or indirectly employs 10 percent of the entire national workforce — revealed sales had tumbled 7.9 percent last month.

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