Fearing coronavirus recession, France announces €45 billion in business aid
Issued on: Modified:
France's finance minister said Tuesday that he was willing to nationalise large companies to protect them from bankruptcy, while warning that the country faces recession this year as the coronavirus epidemic sinks the economy.
Bruno Le Maire announced a 45 billion euro ($50 billion) aid package to help businesses and employees cope with the escalating health crisis.
"I will not hesitate to use any means at my disposal to protect large French enterprises," the minister said during a conference call with journalists.
"This can be through capital injections or stake purchases. I can even use the term nationalisation if necessary," he said.
"It will be lengthy, it will be violent... this war will require us to mobilise all our forces," he told RTL radio.
Additional economic support measures will be announced shortly, he said, and will be based "on a growth forecast of minus one percent, that is to say negative growth."
France's national debt will exceed 100 percent of GDP this year, he added, well above the European Union's guidelines of not more than 60 percent.
France's markets regulator also moved Tuesday to ban short-selling in 92 stocks for the day in a bid to tame the fierce volatility on financial markets as nervous investors try to assess the virus' economic toll.
Short-selling involves borrowing shares to sell them, effectively betting their price will fall so they can be bought back cheaper, allowing the investor to pocket the difference.
The practice can put immense downward pressure on prices at times when buyer interest is virtually non-existent.
France's Financial Markets Authority (AMF) said that "taking into account the significant losses in recent days on the financial markets" it had decided "an urgent step" was needed.
The short-selling ban would last all day Tuesday for stocks especially hard hit when a global sell-off saw Wall Street plunge nearly 13 percent on Monday.
Le Maire said he was prepared to impose a short-selling ban of up to a month if necessary.
The Paris market, like its European peers, did slightly better in early trade Tuesday, gaining 4.0 percent, helped in part by the short-selling ban, dealers said.
By mid-morning, however, gains were being eroded as virus worries once again came to the fore.
Daily newsletterReceive essential international news every morningSubscribe