France plans to spend 100 billion euros (US$118.3 billion) to pull its economy out of a deep COVID-19-induced slump, signaling renewed efforts by French President Emmanuel Macron to push through a pro-business reform agenda.
The stimulus equates to 4 percent of GDP, meaning France is plowing more public cash into its economy than any other big European country as a percentage of GDP, an official said ahead of its formal launch later yesterday.
France’s recession, marked by a 13.8 percent second-quarter GDP contraction that coincided with the country’s COVID-19 lockdown, and which is set to generate an 11 percent drop this year as a whole, has also been one of Europe’s deepest.
The stimulus package earmarks 35 billion euros to make the economy more competitive, 30 billion euros for more environmentally friendly energy policies and 25 billion euros for supporting jobs, officials said.
“This recovery plan aims to keep our economy from collapsing and unemployment exploding,” French Prime Minister Jean Castex said on RTL radio.
He said the government aimed to create at least 160,000 jobs next year thanks to the plan.
Focused mainly on boosting companies and due to run over two years, the plan does little to directly support consumer demand — traditionally the engine of French growth — in contrast to a stimulus plan of 130 billion euros launched in spring in Germany with a value-added sales tax cut.
Macron’s government is banking on the plan to return the eurozone’s second-biggest economy to pre-crisis levels of activity by 2022 after what is expected to be its worst post-war recession.
That timeline would restore Macron’s record on the economy should he run for re-election in 2022 after the COVID-19 crisis wiped out much of the economic gains made before then on growth and jobs.
The recovery plan aims to put Macron’s pro-business push back on track, with already flagged cuts in business taxes of 10 billion euros annually and fresh public funds to give a boost to France’s industrial, construction and transport sectors.
The transport sector would get 11 billion euros, with 4.7 billion euros targeting the rail network in particular, while energy-efficient building renovations would be spurred with 4 billion euros for public buildings and 2 billion euros for homes, officials said.
The hydrogen industry, increasingly seen as a key building block in the transition away from fossil fuels, would get 2 billion euros.
Another 1 billion euros would be offered in direct aid for industrial projects, including 600 million euros to help firms relocate back home.
About 80 billion euros of the overall cost of the plan would weigh directly on the budget deficit, with EU subsidies offsetting 40 billion euros, officials said.
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