France has one of the largest economies not only in the European Union but in the world as well. This fact once more underlines the importance of the local economy. Nevertheless, even for such a huge economy, the coronavirus pandemic created tons of problems.
Moreover, the pandemic had a tremendous impact on France. It won’t be easy to get the economy back on track. Also, it could take several years to tackle all issues associated with the pandemic. Hopefully, the country’s government is willing to spend billions of dollars to support the economy. It makes sense, as without the government it will be all but impossible to stabilize the situation.
The government understands the severity of the problem. France will spend $118 billion to revive its economy, decimated by the pandemic. The country will spend $118 billion as part of the recovery plan that revives pro-business reforms championed by President Emmanuel Macron.
It is worth mentioning that a $118 billion stimulus equates to 4% of gross domestic product (GDP). It means the country will invest more public cash into its economy as a percentage of GDP than any other big European country.
People should take into account that, GDP contracted by 13.8% in the second quarter. As a reminder, the local economy fell into recession. This is not the end of the story as the GDP is expected to decline by 11% in 2020 as a whole.
The primary goal of this stimulus package is to bost companies. Interestingly, the stimulus package earmarks 35 billion euros to make the economy more competitive. Moreover, the government plans to spend 30 billion euros to promote greener energy policies. Also, the rest will go on supporting jobs, training as well as broader social initiatives.
Local economy and greener energy policies
Notably, the government wants to create at least 160,000 jobs in 2021 under the plan. Macron hopes to return the euro-zone’s second-biggest economy to pre-crisis levels by 2022. Interestingly, his time in office ends in 2022.
Nevertheless, this plan does little to boost the traditional engine of French growth, consumer demand. For example, Germany launched a 130 billion euro stimulus in June with a cut in value-added sales tax.
The country’s government hopes to persuade consumers to spend money, they accumulated during the two-month lockdown by supporting jobs.
Interestingly, the new public funds are focused on industrial, construction, and transport sectors. All sectors mentioned above suffered heavy losses due to one of Europe’s strictest lockdowns.
It is worth noting that, much of the new investment seeks to accelerate a transition away from fossil fuels. As a reminder, ecology became an important topic for Macron after his party suffered losses to environmentalists in municipal elections in 2020.
Moreover, much of the new investment will go into the transport sector and rail network specifically. It is not surprising as it is important to modernize the rail network. Furthermore, the government plans to spend 6 billion euros to make public buildings as well as homes better insulated.
The country’s government is working hard to revive the economy and the $118 billion stimulus package will make it easier to reach this goal.
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