Slammed by Covid, France unveils $118 billion economic rescue plan

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September 3, 2020 7:34 PM

 "It's an important step for our strategy in the fight against the economic and social consequences of the crisis that hit France," Prime Minister Jean Castex said.

French Prime Minister Jean Castex

Facing resurgent virus infections, France’s government unveiled a 100 billion-euro (USD 118 billion) recovery plan Thursday aimed at creating jobs, saving struggling businesses and yanking the country out of its worst economic slump since World War II. The massive plan includes money to bring back manufacturing of medical supplies to French factories, develop hydrogen energy, help museums and the cinema industry, train young people for 21st century jobs and hire more staff at unemployment offices. “It’s an important step for our strategy in the fight against the economic and social consequences of the crisis that hit France,” Prime Minister Jean Castex said.

The government spent hundreds of billions of euros in emergency aid as the virus sped across France and filled its once-renowned hospitals earlier this year, prompting a strict two-month lockdown that nearly froze the economy but slowed the spread of infections. More than 30,600 people with the virus have died in France, among the highest death tolls in Europe after Britain and Italy.

“France held on, but it is incontestably weakened,” Castex said, and now must pull itself out of an extremely sudden and brutal recession. The economy shrank 13.8% in the second quarter, which has torpedo’s President Emmanuel Macron grand mission to transform the French economy before his first term end in 2022.

France is again seeing a growth in infections after summer vacations, reporting more than 7,000 virus cases Thursday, the highest daily rate in Europe. That is also well above the several hundred cases a day reported in May and June, when France was emerging from lockdown and testing less. The number of people in intensive care with the virus is edging up, though is far from the crisis levels of March and April.

Despite the rise, France’s schools reopened their doors this week for in-person classes, and authorities are encouraging people to return to work. And the government insisted Thursday it’s time to plan for the post-virus future.

In a country that has long struggled to keep unemployment under 10%, the plan aims to create 160,000 jobs next year and restore France’s 2019 GDP level by 2022 the year of the next presidential election. “It’s ambitious but perfectly within our reach,” Castex said.

Called France Reboot, the plan will include 40 billion euros ($47.3 billion) in aid from a European Union-wide rescue plan approved in July. Castex said the government won’t 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.

About a third of the 100 billion euros will go to supporting businesses, a third for jobs and other societal measures and a third for reducing emissions and protecting biodiversity. Macron has been criticized for not living up to promises to fight climate change, and critics said despite the big price tag, Thursday’s new plan still doesn’t do enough to catch France up with European neighbors in terms of protecting the environment. Others expressed concern that the money wouldn’t prevent French businesses from declaring bankruptcy or announcing mass layoffs in the coming months.

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