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Sarkozy rolls out economic stimulus plan

Video by Christopher MOORE

Latest update : 2008-12-04

French President Nicholas Sarkozy is due to unveil a 20-billion-euro stimulus package to boost consumer spending and keep France's hard-hit car and construction industries afloat during the global economic slowdown.

AFP - President Nicolas Sarkozy is Thursday to unveil a 20-billion-euro (26-billion-dollar) stimulus plan to shore up France's vital car and construction industries in a bid to stave off a looming recession.
   
France's contribution to a European-wide stimulus drive hoped to total 200 billion euros, the plan is expected to zero in on the crisis-hit auto sector, the second victim of the global economic downturn after the financial sector.
   
Sarkozy will use a visit to Douai in northern France, home to a major Renault car factory, to present details of the package.
   
Workers in the car industry and construction are already among the hardest hit by a recent spike in French jobless figures.
   
National auto champions Renault and Peugeot have announced thousands of job cuts as sales tumbled 14 percent in October, raising the alarm for a sector that employs some 2.5 million people in France.
   
The head of Renault-Nissan, Carlos Ghosn, warned Monday that countries face massive job losses unless they move quickly to bring financial assistance to their carmakers.
   
"There will be an action plan for the car sector," Employment Secretary Laurent Wauquiez said Wednesday. "The president is convinced that a great country that wants to preserve jobs cannot let its industries disappear."
   
Among key measures, car owners who scrap an old vehicle to buy a new one are expected to be offered a 1,000-euro bonus, in a bid to help shift unsold stocks of close to a million vehicles, media reports said.
   
Auto manufacturers are also expected to get aid for developing electric and other environmentally friendly cars.
   
Help for the construction industry could take the shape of new social housing projects and an extension of zero-percent property loans.
   
The stimulus package is also expected to announce help for the lowest-income households in a bid to boost flagging consumer spending.
   
France has so far narrowly escaped the tide of recession stalking the industrialised world but the OECD forecasts it will fall into recession next year, with the economy contracting 0.4 percent.
   
Meanwhile the country is facing a worrisome rise in the jobless, whose numbers jumped 46,900 in October for the biggest increase in 15 years.
   
French unemployment, one of Europe's highest, was already running at 7.2 percent in the second quarter of this year and the OECD has forecast it will go up to 8.2 percent next year.
   
The French employers federation MEDEF unveiled its own stimulus proposals Wednesday, calling for cuts in corporate tax, a freeze on employer welfare contributions and an extension of tax breaks for investing in small businesses.
   
Sarkozy's plan comes on the heels of a 20-billion-euro strategic investment fund launched last month to shield French industry from foreign predators.
   
The European Commission last week called for an overall package worth 200 billion euros, drawn from national plans and EU funds, to snap Europe's economy out of recession through spending hikes and tax breaks.
   
The Commission aims to secure backing from an EU summit in Brussels next week for the target, which amounts to 1.5 percent of the 27-nation bloc's gross domestic product.
   
Despite agreement on the need to coordinate European action, several countries including Germany are refusing to pledge more than they deem necessary to get their own economies moving.
   
Germany is one of the few EU countries heading into the current downturn with strong public finances, in stark contrast to France whose public spending deficit is set to overshoot the EU limit of three percent of output next year.
 

Date created : 2008-12-04

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