France unveiled an €100 billion (£90 billion) stimulus package for its stuttering economy today, putting pressure on UK chancellor Rishi Sunak to do the same.
With the UK government reportedly plotting tax increases and cutbacks, the French went the other way, with a scheme it says will create 160,000 jobs next year.
The multi-pronged “France Relaunch” earmarks €35bn for making the euro zone’s second biggest economy more competitive, €30bn for more environmentally friendly energy and €25bn for supporting jobs.
The cost of the scheme is equal to 4% of French GDP. That means at this point it is pushing more cash into its economy than other large European countries.
There’s also money to improve transport networks, and €2bn to invest in the hydrogen energy industry – to help the move to greener power sources.
The aim is to get the economy back to where it was pre Covid-19 by 2022. The French economy crashed by nearly 14% in the second quarter.
City economists say the move shows that President Emmanuel Macron plans to push through a pro-business reform agenda. And ups the pressure on others to follow suit, including the UK.
Prime Minister Jean Castex said: “This recovery plan aims to keep our economy from collapsing and unemployment exploding.”
Today there was some optimistic signs for the UK. The services sector is growing at a faster rate than Eurozone rivals, with Markit’s index for August at 58.8, the best reading since April 2015.
Any number above 50 shows growth. In the Eurozone, the PMI fell to 50.5.
Duncan Brook of the Chartered Institute of Procurement & Supply said: “As the UK economy continues to wake from its pandemic slumber, the services sector reported a higher than expected rise in new orders and at the strongest levels since December 2016. Buoyed up by increased consumer spending from domestic markets and unfettered by lockdown measures, businesses continued to be optimistic even though obstacles to stronger growth lingered on.”