France aims to spend 100 billion euros to pull its economy out of one of Europe’s worst slumps, under a fast-moving recovery plan that revives President Emmanuel Macron’s pro-business reforms with a greener tinge. The $118 billion stimulus equates to 4% of gross domestic product, meaning France is ploughing proportionally more public cash into its coronavirus-ravaged economy than any other big European country, an official said ahead of a formal launch later on Thursday.
The two-year package is focused on supporting growth for companies, which Prime Minister Jean Castex said would receive funds on a use-it-or-lose-it basis.It earmarks 35 billion euros to make the economy more competitive and 30 billion to promote greener energy policies.The rest will go on supporting jobs, training and broader social initiatives with the aim of creating at least 160,000 jobs next year.
Macron is banking on returning the euro zone’s second biggest economy to pre-crisis levels of activity by 2022 – re-election year should he decide to run again – and ING economist Charlotte de Montpellier said the plan would need to be implemented quickly to succeed. However, it does little to directly support the traditional engine of French growth, consumer demand. By contrast, neighbouring Germany launched a 130 billion euro stimulus in June with a cut in value-added sales tax. Instead, France is betting that, by supporting jobs, the plan will give consumers the confidence to start spending the 100 billion euros in extra savings that they built up during the two-month coronavirus lockdown.
The government wants the plan’s funds to be ploughed into the economy as soon as possible and Castex said companies that failed to make quick use of their share would see the money redeployed. Focused on the industrial, construction and transport sectors, all of which suffered during one of Europe’s strictest lockdowns, much of the new investment seeks to accelerate a transition away from fossil fuels. Macron has made that a priority since his ruling party suffered losses to environmentalists in municipal elections this year.
Source: Reuters
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