What’s Inside France’s Covid Recovery €100bn Plan?

Following in the steps of the European Union’s historic agreement reached in July for €750bn in grants and loans to counter the impact of the pandemic in the 27-member block, France unveiled its own €100bn (£91bn) national initiatives in September

Introduced by the government as ‘France re-launch’, it’s stated goals are to reverse rising unemployment, help French investment competivity by tax cuts for business, and provide specific incentives for France's transformation to a green economy.

The Prime Minister said the money would be spent over the next two years, with the hope the investment would return the economy to its pre-pandemic levels by 2022.

The €100bn represents the equivalent of 4% of France's annual economic output, and as Prime Minister Jean Castex said, it was almost four times bigger than the rescue strategy implemented after the financial crisis of 2008. About €40bn of the funding will come from the new European Union recovery fund.

A quick overview at how the €100bn is earmarked:

€30bn for the green transition

The recovery plan will include investments for energy-efficiency renovation programmes for private and social housing and public buildings, for sustainable mobility, for decarbonisation of the industry and for green technologies (hydrogen, biofuels, recycling). 

€36bn for skills, social and territorial cohesion

Important financing of employment support measures and investment in skills and competences will help safeguard jobs, improve the employability of the most vulnerable, especially the youth, and strengthen productivity.

€34bn to reinforce the competitiveness and resilience of the French economy

Measures will include a massive reduction of taxes on business (€10bn per year), measures to reinforce own funds of businesses, investments in innovation and in the resilience of the French industry especially to secure critical supplies.

Importantly, the recovery plan puts the government’s pro-business efforts back on track, with structural reforms planned by the government to further improve the competitiveness, attractiveness and productivity of the French economy.  

Key economic and tax measures will include: 

  • a permanent reduction of taxes on businesses amounting to €10bn annually (€20bn over 2021-2022);
  • €1bn to favour the relocation of industrial production in France (€600M dedicated to investments in five strategic sectors and a €400M fund to support industrial projects in France);
  • €11bn dedicated to investments in key technologies through the Programme d’investissements d’avenir (PIA – €20bn in total over 2021-2025);
  • €3bn to strengthen the equity capital of SMEs/VSEs and mid-size companies.

About the Author:

Didier Hémion is partner and director of the international business services department at Primexis

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