France Gives Hints About Stimulus Plan to Be Unveiled Next Week

Frances government gave further hints on Wednesday about the contents of its 100 billion-euro ($118 billion) plan to boost the economy as it seeks to reassure the country it has the situation under control.

Measures will include 2 billion euros for the cultural sector, Prime Minister Jean Castex said in an interview on France Inter radio. Initially due earlier this week, full details of the stimulus package will be announced on Sept. 3, he added.

France is loosening the purse strings to get the economy back on its feet after months of efforts to stop the progression of the Covid-19 epidemic. A national lockdown that began in March stifled the virus but also sent the economy into its worst tailspin on record. The government expects wealth production to contract by 11% this year, but as infections are climbing in France and around Europe, uncertainty remains high.

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Asked how the plan will be funded, Castex said there will be no tax hikes and pointed to the European Unions stimulus package. Partly based on mutualized debt, France will receive around 40 billion euros from the EU, he said.

The prime minister said last month that French industry would receive 40 billion euros in help, which President Emmanuel Macron said would provide an opportunity to build a greener economy.

Castex has also said the government will spend 30 billion euros this year and a further 8 billion in 2021 through furlough plans to support jobs and salaries at companies suffering sustained order book declines. More than 20 billion will go toward insulating buildings, reducing emissions, local and sustainable food production, and supporting green technology.

Castex said on Wednesday that the government wanted to reassure the French people about its management of the health situation before unveiling more economic measures. These will mark “continuity” with emergency steps already taken, such as unemployment benefits, tax cuts and state-sponsored loans for affected companies. Macron has said the total envelope would amount to 460 billion euros.

France and neighboring countries are trying to limit infections as people return from vacations, attend summer gatherings, and prepare to return to school and places of work. While officials tighten local restrictions in some areas, the government is reluctant to resort to the sweeping measures imposed during the initial peak of the pandemic in March and April.

The cultural sector has been particularly hit by the crisis, and Castex said gatherings of more than 5,000 people would be banned in areas where virus circulation is high and that some events may be canceled.