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France prepares €100 billion rescue package to save coronavirus-hit economy

France is due to present a mammoth spending plan for its virus-hit economy Thursday, hoping to reverse a dramatic downturn in growth and ward off the threat of mass layoffs at struggling companies.

France prepares €100 billion rescue package to save coronavirus-hit economy
Can Emmanuel Macron's government kickstart the economy and save French jobs? Photo: AFP

President Emmanuel Macron's government has earmarked €100 billion to counter the devastating impact of the coronavirus at a time when daily virus numbers in France are on the rise again.

The sum, a combination of new spending and tax breaks, is four times the amount France spent over a decade ago to deal with the global financial crisis, and represents a third of its typical annual budget, Prime Minister Jean Castex said ahead of the plan's launch.

The French budget boost is separate from a €750 billion European Union plan agreed after acrimonious haggling in July.

Some critics say the money may come too late to save many companies, while others say high hopes for Macron's green revolution in the French economy are likely to be dashed.

The virus impact has plunged the French economy into its worst downward spiral since 1945, with gross domestic product plunging 13.8 percent in the second quarter, after a drop of more than five percent in the first.

The government expects GDP for the whole year to contract by 11 percent.

Economists have welcomed the departure from the kind of austerity measures seen after the 2008 crisis which were “a huge error,” said Philippe Martin, who heads up the CAE think tank which advises the government.

This time, “the focus is not on public debt,” agreed Xavier Ragot, president of the OFCE economics institute.

The economy saw a lively but brief rebound just after the end of lockdown measures in mid-May, but has since shown worrying signs of sliding back again, while French virus infection rates are back on the rise.

'The France of 2030'

Measures to prevent a feared second virus wave, such as mandatory mask-wearing at the workplace, are seen undermining the very confidence among economic actors that the government is desperately trying to restore.

Unlike the post-2008 crisis response, much of the new plan targets the supply and investment side of the economy, namely businesses.

The measures over the next two years include €10 billion's worth of corporate tax cuts.

Youth employment is also a major target of the spending, with €6.5 billion aimed at encouraging hiring for millions of new entrants on a depressed job market.

Beyond emergency measures, the government also hopes to stimulate investment in green technologies, and help some economic sectors such as health care become more competitive.

“This is not a strategy to deal with the current difficulties, because that's already done,” Macron said last week. “It's to pave the way for the France of 2030.”

Some €30 billion are earmarked for greener policies, some of which will overlap with the €40 billion planned for the country's re-industrialisation.

“How much is 30 billion when you also spend 17.7 billion every year on fossil fuel, and when you cut corporate tax by 20 billion without asking for anything in return?” said Arnaud Schwartz, head of France Nature Environnement, an NGO.

 

Businesses or consumers?

Others say the government, while keen to help businesses, should not neglect consumer spending that stagnated in July, after a brief spike in the early summer.

French households have accumulated €80 billion in savings since March, significant firepower if people could be induced to spend, analysts say.

But the government has rejected calls for a huge VAT cut like the one seen in Germany, saying its heavy financing of partial unemployment measures had already done much to keep households' purchasing power intact.

“The best way to support demand is to create jobs,” Finance Minister Bruno Le Maire said.

Denis Ferrand, director of economics research institute Rexecode, said the strategy of favouring corporate investment over consumer spending made sense “because household revenues have remained relatively intact.”

Opposition politicians meanwhile have said Macron's plan, which is part of France's 2021 budget to be voted on in parliament only at the end of the year, may be coming too late for many companies.

“Every day lost widens the social divide”, said Socialist party spokesman Boris Vallaud.

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FOOD & DRINK

7 tips to keep your grocery shopping in France affordable

With rising inflation and cost of living, many people in France are desperate to keep their grocery bill low. Here are a few tips for how to avoid paying too much for food, drink and other everyday items.

7 tips to keep your grocery shopping in France affordable

With inflation ticking upward, we’ve seen prices rise, especially for things like fresh vegetables, meat, pasta and cooking oil. Even though inflation is affecting food prices less than energy prices, buying groceries is still a huge part of every household’s budget, and unfortunately things are set to keep getting more pricey. 

We’ve put together a list of a few ways you can save a few euro at the supermarket:

Figure out if you qualify for any government benefits

First things first, it is worth seeing whether you can qualify for any existing government assistance, like CAF. On top of this, the French government has promised to set up a food voucher of €50 per month for low-income households after the parliamentary elections in June. 

READ MORE: EXPLAINED: How to receive CAF payments in France

Compare store prices

Unfortunately, going to the closest supermarket is not always the most economical solution. If you prioritise grocery stores on the lower end of the price spectrum (and you’re willing to walk a bit further) you can save a lot of money. A helpful tool to find the cheapest store near you is the “Que Choisir” online interactive map (click here) that has listed 4,000 affordable stores in mainland France. 

Discount grocery stores, like Lidl and Aldi, are great options for saving a little extra at checkout. But if you must go to a pricier chain, like Monoprix for instance, try to buy Monoprix brand items – they’re typically a little less expensive than name brand foods.

Plan ahead to make the most out of discounts

If you go online ahead of heading to the grocery store, you can see which items will be discounted (“promotion”). If you cannot find this information online, you can always go to the store and ask for a catalogue of that week’s sales items.

Normally, this is something the cashier should have access to. With these discounts in mind, you can construct more affordable recipes. 

Franprix’s website, the ‘discounts’ page

Also, if you’re looking for cheaper recipes in general, you can always go to blogs and online recipe sites specialised in frugal shopping. If you want to try some French specific sites, you can test out “https://www.marmiton.org/” or “https://1repas1euro.com/recettes/

When it comes to discounts though, be careful about conditions involved (particularly when it comes to loyalty cards).

Sometimes these promotions promise a lot, but actually getting your money back might not be as simple as slashing a few cents at the checkout – you might need to send the coupon somewhere to get the discount, or wait for points to accumulate on your card.

That being said, you can optimise your discounts using several online sites that allow you to combine your loyalty cards (Fidme, Fidall, and Stocard). Other online coupon sites include Groupon, which allows you to make grouped purchases (therefore cheaper), and Coupon Network and Shopmium, which help you benefit from existing discounts. For cashback plans, you can look to websites such as Shopmium, iGraal, FidMarques and Quoty, which allow you to be reimbursed for a part of your expenses.

Make a list, set a budget… and stick to it

It might seem obvious, but when you go into the store, try to resist temptation. The best way to do this is to keep track (in real time) how much you are spending.

Some stores make this easier by allowing you to carry around a ‘self-scanner,’ this will help you to watch your bill go up as you shop. Another tip for this is to withdraw the exact amount of cash you expect to need for the essentials of your trip – obviously in order to do this, you’ll need to know the base prices of your essential items, so it will require a bit of planning ahead.

Buy (then freeze) soon-to-expire products

A consumer’s best friend and sure-fire way to decrease waste! Items coming up on their use-by-date tend to be discounted, so if you plan to purchase these foods and then immediately freeze them, you can significantly extend their shelf life.

Lots of supermarkets make this easier for you by dedicating entire shelves to “short shelf life” items that, according to Elodie Toustou, the head of the “Money” section of the magazine 60 Millions de consommateurs, opting for these foods will allow you to “pay three to four times less.”

Another great way to do this is to use applications like “Phénix” and “Too Good to Go.” These applications will allow you to set your geographic parameter and then click on food stores, restaurants, and bakeries in your area that are getting rid of “panniers” (sacks) of soon-to-be-expired foods. Lots of times these panniers cost only a couple euros.

The trick here is to plan ahead by arriving at the start of the allotted time (if the boulangerie on your corner is offering “Too Good To Go” bags from 11am to 2pm, try to get there as close to 11am as possible for the best items).

Re-consider markets and farmer’s stores

Contrary to popular belief, buying from farmers’ markets and grocers that sell predominantly local products actually can save you money, particularly if you are buying the seasonally relevant fruits and vegetables. Buying directly from a producer can also allow you to eliminate the margin taken by intermediaries. But be careful, this rule is not true all the time.

One way to benefit from cheaper prices at markets is to arrive as late as possible, when the merchants have started to pack up their products. This might allow you to benefit from lower prices or even free items, as they’ll be hoping to get rid of their remaining items.

Know what items are most impacted by inflation

Finally, as inflation continues to increase, try your best to monitor which foods are most impacted. If possible, it might be worth removing or limiting them from your diet – or looking for more affordable alternatives.

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