France promises €45 billion in coronavirus aid and warns of coming recession
French economy minister Bruno Le Maire warned on Tuesday that the country faces recession this year as he announced a €45 billion aid package to help businesses and employees cope with the coronavirus crisis.
The government, due to present a series of further support measures shortly, will base them "on a growth forecast of minus one percent, that is to say negative growth," Le Maire told RTL radio on Tuesday morning.
The forecast was "provisional," Le Maire said, as he described the coronavirus as "a disaster for all countries, for the G7 and for France," which would "also lead to recession in the eurozone."
It was a "economic and financial war" that will last some time, Le Maire said. "It will be lengthy, it will be violent.. this war will require us to mobilise all our forces."
Le Maire's announcement came the morning after President Emmanuel Macron's second public coronavirus speech in less than a week, where the president promised to protect French businesses through the coronavirus crisis.
Many businesses, especially airlines, have already been hard hit by the financial repercussions of the coronavirus.
Air France has said it will cut capacity between 70 and 90 percent over next two months.
But the new lockdown will have widespread negative economic impact on all businesses, and on the national economy as a whole.
READ ALSO: What exactly do Macron's new coronavirus restrictions mean?
This is why the French government has now stepped up measures to protect businesses and employees through the looming financial slump.
"We won't add fear of bankruptcy and unemployment to the health crisis," Macron had said during his first speech, on March 12th.
The €45 billion will be used to help struggling businesses and ensure that no employees would lose their salaries during the mandatory period of shut-down.
Ready to nationalise 'if necessary'
The economy minister also said the government was ready to nationalise firms "if necessary" to protect the economy from the fallout.
"I will not hesitate to use any means at my disposal to protect large French enterprises," the minister said during a conference call with journalists.
"This can be through capital injections or stake purchases. I can even use the term nationalisation if necessary," he said.
In addition to the already announced tax breaks, businesses can also suspend payments on rent, gas and electricity.
The 'partial unemployment' scheme has also been greatly enlarged so that anyone not able to work because of the crisis can claim benefits, while still having their job held open for them when things return to normal. Employers are barred from firing employees during this period.
Another social measure that has been taken was to extend the traditional winter truce (trêve hivernal), which prevents landlords from evicting tenants during coldest months, by two months after the normal end date on March 31st.
French stock market to tame market volatility
On Tuesday, the French stock market regulator said it was banning short-selling in 92 stocks, a move meant to help tame the massive volatility in the markets caused by the coronavirus epidemic.
"Taking into account the significant losses in recent days on the financial markets, the Financial Markets Authority has decided to take an urgent step," it said in a statement.
The ban order covers mostly bank and financial stocks.
Investors use short-selling to bet the market will fall, putting tremendous downward pressure on prices at a time when buy interest is virtually non-existent.
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The government, due to present a series of further support measures shortly, will base them "on a growth forecast of minus one percent, that is to say negative growth," Le Maire told RTL radio on Tuesday morning.
The forecast was "provisional," Le Maire said, as he described the coronavirus as "a disaster for all countries, for the G7 and for France," which would "also lead to recession in the eurozone."
It was a "economic and financial war" that will last some time, Le Maire said. "It will be lengthy, it will be violent.. this war will require us to mobilise all our forces."
Le Maire's announcement came the morning after President Emmanuel Macron's second public coronavirus speech in less than a week, where the president promised to protect French businesses through the coronavirus crisis.
Many businesses, especially airlines, have already been hard hit by the financial repercussions of the coronavirus.
Air France has said it will cut capacity between 70 and 90 percent over next two months.
But the new lockdown will have widespread negative economic impact on all businesses, and on the national economy as a whole.
READ ALSO: What exactly do Macron's new coronavirus restrictions mean?
The 'partial unemployment' scheme has also been greatly enlarged so that anyone not able to work because of the crisis can claim benefits, while still having their job held open for them when things return to normal. Employers are barred from firing employees during this period.
"Taking into account the significant losses in recent days on the financial markets, the Financial Markets Authority has decided to take an urgent step," it said in a statement.
The ban order covers mostly bank and financial stocks.
Investors use short-selling to bet the market will fall, putting tremendous downward pressure on prices at a time when buy interest is virtually non-existent.
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