UPDATE 1-France unleashes 100 bln euro stimulus to revive economy
PARIS, Sept 3- France plans t8 billion) to pulln euros ( $118 billion) to pull its economy out of a deep coronavirus-induced slump, signalling renewed efforts by President Emmanuel Macron to push through a pro-business reform agenda. The stimulus equates to 4% of gross domestic product, meaning France is ploughing more public cash into its economy than any other…
By Leigh Thomas
PARIS, Sept 3 (Reuters) – France plans t8 billion) to pullneuros ($118 billion) to pull its economy out of a deepcoronavirus-induced slump, signalling renewed efforts byPresident Emmanuel Macron to push through a pro-business reformagenda.
The stimulus equates to 4% of gross domestic product,meaning France is ploughing more public cash into its economythan any other big European country as a percentage of GDP, anofficial said ahead of its formal launch later on Thursday.
France’s recession, marked by a 13.8% second quarter GDPcontraction that coincided with the country’s COVID-19 lockdownand is set to generate an 11% drop in 2020 as a whole, has alsobeen one of Europe’s deepest.
The stimulus package earmarks 35 billion euros to make theeconomy more competitive, 30 billion for more environmentallyfriendly energy policies and 25 billion for supporting jobs,officials said.
“This recovery plan aims to keep our economy from collapsingand unemployment exploding,” Prime Minister Jean Castex said onRTL radio.
He said the government aimed to create at least 160,000 jobsnext year thanks to the plan.
Focused mainly on boosting companies and due to run over twoyears, the plan does little to directly support consumer demand- traditionally the engine of French growth – in contrast to a130 billion euro stimulus launched in spring in Germany with avalue added sales tax cut.
Macron’s government is banking on the plan to return theeuro zone’s second biggest economy to pre-crisis levels ofactivity by 2022 after what is expected to be its worst post-warrecession.
That timeline would restore Macron’s record on the economyin case he decides to run for re-election in 2022 after thecoronavirus crisis wiped out much of the economic gains madebefore then on growth and jobs.
The recovery plan aims to put Macron’s pro-business pushback on track, with already flagged cuts in business taxes worth10 billion euros annually and fresh public funds to give a boostFrance’s industrial, construction and transport sectors.
Officials said the transport sector would get 11 billioneuros with 4.7 billion targeting the rail network in particular,while energy-efficient building renovations would be spurredwith 4 billion euros for public buildings and 2 billion forhomes.
The hydrogen industry, increasingly seen as a key buildingblock in the transition away from fossil fuels, would get 2billion.
Another 1 billion euros would be offered in direct aid forindustrial projects, including 600 million euros to help firmsrelocate plants abroad back to France.
Some 80 billion euros of the overall cost of the plan willweigh directly on the budget deficit, with EU subsidiesoffsetting 40 billion euros, officials said.
($1 = 0.8455 euros)(Reporting by Leigh ThomasEditing by Marguerita Choy and John Stonestreet)
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