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Record €100 billion stimulus package for France

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 září 2020
President Macron is looking to bring the economy back to the pre-pandemic levels by 2022

Great day yesterday for the French markets, as President Macron announced the release of a stimulus package to help the country's battered economy.

France will benefit from €100 billion worth of #stimulus aid, which equals 4% of its GDP. According to specialists, it is the only European major economy to date to pour so much money into its economy. The French government doesn't totally fund the stimulus package; 40% will come from the European Union's Recovery Fund established in July.  

Jean Castex, France's Prime Minister stated that the aid package will help the country "to regain (our) pre-crisis level of wealth by 2022" and that "the absolute priority is employment." The money will be divided as follows: €70 billion are meant to boost competitiveness between companies and increase youth employment and training.  The rest is for transitioning to a greener economy – buildings renovation so that they can be energy-efficient, decarbonization through investments in environmentally-friendly industries. Moreover, the goal is to create a minimum of 160,000 jobs in 2021.

France’s economy contracted by a record of 13.8% in Q2, after it previously contracted by 5.8%. At a yearly level, the Bank of France forecasted a GDP contraction of 10.3% due to the pandemic. Moreover, it expects the rebound to reach a high of 7% in 2021, and 4% in 2022.

From the experts' point of view, Macron's move is also political, because in 2022 are the presidential elections, and this stimulus package could be the winning ticket for him.

Following the news, the country’s benchmark France40 gained 1.8%. Today, the rally continues, being up 0.75%. 

Sources: reuters.com, euronews.com

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Miguel A. Rodriguez
Miguel A. Rodriguez
financial_writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.