France unveils €100bn stimulus package to revive economy

France unveiled a €100bn (£89bn) package to revive its coronavirus-ravaged economy as President Emmanuel Macron pursued policies to promote business investment.

The deal is equivalent to 4% of gross domestic product and comes amid a recession sparked by the pandemic, with the country reporting a 13.8% GDP contraction in the second quarter with government expecting a full year fall of 11% and 800,000 job losses.

French shares were buoyed on the news with the CAC-40 index up 1.7%, with the positive sentiment spreading across Europe more broadly.

The two-year plan is focused on supporting companies and a move towards green technologies. Measures over the next two years include €35bn in assistance for the corporate sector, the majority in tax cuts, with a further €30bn earmarked for greener policies such as energy-efficient building renovations in the private and public sector.

Transport would receive €11bn, with €4.7bn earmarked for the rail network in particular, officials said. The hydrogen sector was allocated €2bn as France pushed to move away from fossil fuels.

Prime Minister Jean Castex said on Thursday he hoped the country plan would create 160,000 jobs by 2021.

“This recovery plan aims to keep our economy from collapsing and unemployment exploding,” Castex told RTL radio.

“We are investing heavily to support businesses, but we expect them to make a strong commitment to employment, especially for young people," Castex said in an interview with Le Figaro, adding that “the plan will only have its full effect if everyone plays along”.

Castex also pledged there would be no tax increases to pay for the measures. “This is the mistake that was made during the last crisis (in 2008) and we will not reproduce it," he said.