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The $118 billion stimulus equates to 4% of
gross domestic product, meaning France is ploughing more public
cash into its economy as a percentage of GDP than any other big
European country, an official said ahead of its formal launch
later on Thursday.
France's recession, marked by a 13.8% second quarter GDP
contraction that coincided with a COVID-19 lockdown and expected
to generate an 11% drop in 2020 as a whole, has also been one of
the region's deepest.
Focused mainly on boosting companies and running over two years,
the stimulus package earmarks 35 billion euros to make the
economy more competitive and 30 billion to promote greener
energy policies.
The rest will go on supporting jobs, training and broader social
initiatives.
"This recovery plan aims to keep our economy from collapsing and
unemployment exploding," Prime Minister Jean Castex said on RTL
radio.
He said the government aimed to create at least 160,000 jobs
next year under the plan.
Macron is banking on the plan returning the euro zone's second
biggest economy to pre-crisis levels of activity by 2022 -
re-election year should he decide to run again - after what is
expected to be its worst post-war recession.
However, it does little to directly support the traditional the
engine of French growth, consumer demand. By contrast,
neighbouring Germany launched a 130 billion euro stimulus in
June with a cut in value added sales tax.
Instead, France is betting that, by supporting jobs, the plan
will give consumers the confidence to start spending the 100
billion euros in extra savings that they built up during the
two-month lockdown.
With already flagged cuts in business taxes worth 10 billion
euros in both 2021 and 2022, its timeline would restore Macron's
record on the economy while putting back on track a pro-business
agenda that has foundered under a pushback by powerful unions
and, latterly, the coronavirus crisis.
GREENING THE ECONOMY
The new public funds are focused on the industrial, construction
and transport sectors, all which suffered during one of Europe's
strictest lockdowns.
Much of the new investment seeks to accelerate a transition away
from fossil fuels, which Macron has made a priority since his
ruling party suffered losses to environmentalists in municipal
elections this year.
"It's good but this can't be limited to two years, we need to
keep it up for 10 years," said lawmaker Mathieu Orphelin, who
left Macron's party last year to set up a more environmentally
focused party.
Rather than grand new projects, much of the new investment will
go into the transport sector and the aging rail network
specifically, while about 6 billion euros is slated for making
public buildings and homes better insulated.
The hydrogen industry - used to store and transport energy
created by wind turbines and solar panels - will get 2 billion
euros over two years, a sector that Germany is also betting
heavily on with plans to invest 9 billion euros by 2030.
($1 = 0.8455 euros)
(Reporting by Leigh Thomas; Additional reportign by Elizabeth
Pineau; Editing by John Stonestreet)
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