France has unveiled a € 100 billion (£ 89 billion) economic stimulus package to help undo the economic damage caused by the coronavirus.
The government of President Emmanuel Macron has said the investment will include significant spending on green energy and transport.
Nicknamed “France’s recovery”, it aims to reverse the rise in unemployment and includes tax cuts for businesses.
The economy contracted 13.8% between April and June, the largest quarterly decline since World War II.
Unveiling the plan, which is priced at 100 billion euros equivalent to 4% of France’s annual economic output, Prime Minister Jean Castex said it was almost four times as important as the rescue strategy implemented after the 2008 financial crisis.
Its aim is to move away from emergency funding for the coronavirus crisis and to make long-term investments in jobs and training, as well as in France’s transformation towards a green economy.
Around 40 billion euros of the funding will come from the new EU stimulus fund.
Around 35 billion euros have been earmarked for projects aimed at making the economy more competitive and 30 billion euros will be spent on greener energy policies. About 6 billion euros are planned to better insulate public buildings and houses. The hydrogen industry, a sector that receives huge investments in Germany, will receive 2 billion euros.
The rest of the investment package will continue to support employment, training and broader social initiatives with the aim of creating at least 160,000 jobs next year.
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Mr Castex said the money would be spent over the next two years, and he hoped the investment would return the economy to pre-pandemic levels by 2022. France’s next presidential election is expected to start in April 2022.
“From an economic and social standpoint, it is infinitely better to temporarily worsen public finances in order to invest, rearm the economy and move forward than to sink into austerity and allow unemployment and the human tragedy to explode” Mr. Castex said during a press briefing.
Mathieu Orphelin, who left Mr Macron’s party last year to create a party more focused on the environment, told Reuters. [the plan] that’s good, but it can’t be limited to two years, we have to keep it for 10 years. ”
Thierry Drilhon, president of the Franco-British Chamber of Commerce, told the BBC he believed the stimulus package would help industries that had suffered “considerably” from the coronavirus crisis, provided the investment was made correctly implemented.
“Obviously, execution will be the key to making sure the investment is well spent,” he said. “We all know you can have good vision, but vision without execution is just hallucination. ”
France is on track for one of Europe’s worst recessions, with an 11% drop in economic output forecast for 2020 as a whole.