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France unveils €100 billion economy 'reboot' rescue plan

France's Prime Minister Jean Castex at a press conference in Paris, August 27,  2020.
France's Prime Minister Jean Castex at a press conference in Paris, August 27, 2020. CHRISTOPHE ARCHAMBAULT POOL/AFP

Facing resurgent virus infections, France's government unveiled details Thursday of a €100 billion ($118 billion) recovery plan aimed at creating jobs, saving struggling businesses and pulling the country out of its worst economic slump since World War II.

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"The ambition and size of this plan are historic," Prime Minister Jean Castex told reporters after a cabinet meeting backed a stimulus package that promised 160,000 new jobs next year as part of a recovery plan worth €100 billion.

Called “France Reboot”, the plan includes injecting money to bring back manufacturing of medical supplies to French factories, to develop hydrogen energy, to train young people for 21st century jobs and to hire more staff at unemployment offices.

"It’s a massive list of measures in this plan, the money is going to many different places,” explained Stephen Carroll, FRANCE 24’s business editor. “But the French government has broken it down to under three main headings. One, is for jobs, including social programmes and health care – that’s around €35 billion euros. Another, is to support business and investment in business – that’s another €35 billion. And the last €30 billion is going towards investing in green transition, investing in new technologies and also in renovating processes.”

FRANCE 24's Stephen Carroll breaks down the govt's economic rescue plan
02:18

The stimulus equates to 4 percent of gross domestic product, meaning France is ploughing more public cash into its economy than any other big European country as a percentage of GDP.

The country’s recession, marked by a 13.8 percent second quarter GDP contraction that coincided with the country's Covid-19 lockdown and is set to generate an 11 percent drop in 2020 as a whole, has also been one of Europe's deepest.

France’s stimulus plan differed from other European countries because its focus is on creating business and to “keep people in employment, to keep them earning and sustain consumer spending, the most important driver of the economy”, explained Carroll.

‘Ambitious but perfectly within our reach’

Castex said the government would not raise the country’s already high taxes to pay for the rest, but will issue new treasury bonds instead.

After France financed a mass temporary unemployment scheme to keep people from losing their jobs amid the coronavirus lockdown, Finance Minister Bruno Le Maire promised to “continue to do the maximum” for workers and businesses.

The plan, said Castex, was “ambitious but perfectly within our reach”.

The budget boost is four times the amount France spent over a decade ago to deal with the global financial crisis, and comes on top of hundreds of billions already spent in an early pandemic response.

"The time for a relaunch has come," tweeted President Emmanuel Macron.

The recovery plan aims to put Macron's pro-business push back on track, with already flagged cuts in business taxes worth €10 billion annually and fresh public funds to give a boost to France's industrial, construction and transport sectors. 

 'A bygone era'

Much of the new plan targets the corporate sector, including with €35 billion worth of help, much of it in the shape of tax cuts.

But Philippe Martinez, head of the leftist CGT union, faulted the government for failing to extract promises from companies that they would save jobs in return.

"They gave money to Air France and Renault and for what? Job cuts. Is that what public money is for?" he said.

Campaigners said the €30 billion earmarked for a green transition was too little, and called on the government to demand environmental commitments from companies in return for state help.

"The government is presenting a recovery plan from a bygone era, much less green than it would seem," said Jean-Francois Juilliard, head of Greenpeace France.

"There's nothing about cutting road or air traffic, nothing on any reduction of meat, egg or dairy production which would be needed to cut greenhouse gas emissions," he said.

(FRANCE 24 with AFP and AP)

 

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