French stimulus plan budget to be submitted for approval
President Emmanuel Macron’s $116 billion 2021 stimulus package will be presented to the French Council of Ministers (Cabinet) for approval today before being referred to parliament later this week.
The stimulus allocates $41 billion for pro-business reforms to increase competitiveness, $35 billion for environmentally-friendly energy policies and $29 billion for employment-support targeted at creating 160,000 new jobs in the next year. The revival plan hopes to be more aggressive than the prior $151 billion stimulus that failed to arrest a 13.8% second-quarter GDP contraction—the worst post-war contraction.
The stimulus is expected to pass through parliament, where Macron’s ruling party retains enough support to approve the enabling legislation, despite defections eroding its majority.
The package is timely given Macron’s likely re-election bid in 2022. The package will likely focus on tax cuts and targeted funding for sectors like green hydrogen. However, Macron has all but given up on industrial reforms, accepting the 35-hour week—a focus of resistance from labour unions. Whether the package will stimulate an economic rebound is contingent on consumer spending, a mainstay of economic growth. Macron appears to rest his hopes on recent forecasts suggesting the economy will recover faster than expected.
Wake up smarter with an assessment of the stories that will make headlines in the next 24 hours. Download The Daily Brief.
