AFP - President Nicolas Sarkozy said Monday that France would take out a loan to finance a 35-billion-euro spending spree aimed at boosting competitiveness and funding the best universities in the world.

Sarkozy argued that by borrowing and spending 35 billion euros (52 billion dollars), France could generate 60 billion euros' worth of state and private investments and leave its year-long recession in better shape than before.

"Today, we must prepare France for the challenges of tomorrow so that our country can fully benefit from the recovery, so that it is stronger, more competitive, so that it creates more jobs," he said.

Training, research, industry and small businesses will all receive massive support as a result of the so-called "grand loan", Sarkozy said, but the biggest portion -- 11 billion euros -- will go to universities.

"Our aim is very simple. We want the best universities in the world," he said, in a televised address from the Elysee palace before an audience of government ministers and reporters.

The state will immediately give one billion euros to build a "gigantic campus" in the Saclay suburb of Paris that would group various colleges currently dispersed around the capital, he promised.

A further eight billion euros would be ploughed into research, he said.

Of the 35 billion euros to be spent, 13 billion euros will come from the reimbursed bailout loans given to French banks with the remaining 22 billion raised on the markets.

Nevertheless, the "grand loan" faces resistance in Brussels, which has asked France to bring its deficit down to 3.0 percent of GDP by 2013. France's public deficit is on track to hit 8.5 percent of GDP next year.

A year ago, Sarkozy unveiled a 26-billion-euro stimulus plan that propped up the car industry and helped fund large-scale infrastructure projects such as new high-speed TGV rail lines.

That came on top of a 20-billion-euro strategic investment fund announced in November 2008 to protect French industry from foreign takeovers at a time when the economy was tanking.

Sarkozy said Monday that French governments "have constantly sacrificed investment. That is a mistake."

French small businesses -- particularly in the aeronautics, automobile, space, rail and shipbuilding industries -- will get 6.5 billion euros so they can regain their competitive edge and boost exports, he said.

"We have lost market share, not to emerging countries, not to Brazil, India, China, but to our European neighbours," said Sarkozy.

He granted an extra five billion euros to sustainable development, with a billion to go to developing fourth generation nuclear reactors the he said will recycle uranium and plutonium and produce "less waste."

Two and a half billion will to go France's environment agency which will then pick renewable energy projects to invest in, he said.

Some 4.5 billion euros will go to rolling out a high-speed internet network across France and to digitising the contents of France's museums and libraries and its cinema heritage, he said.

Earlier this year, Sarkozy tasked former prime ministers Michel Rocard and Alain Juppe to form a commission to outline priorities for the massive borrowing and determine its size.

Socialist opposition leader Martine Aubry has dismissed the national loan as a publicity stunt, saying France will "be doing what it does every day and what all countries do, that is borrow from the financial markets."

Didier Migaud, the Socialist head of a parliamentary finance commission, warned of France increasing its debt after cutting taxes.

"A loan means extra debt," he told reporters. "Why must we search for 35 billion euros of extra borrowing when we could have avoided losing (tax) revenues?"