France Prepares Second Wave of Stimulus With Nod to Automakers

(Bloomberg) -- France is preparing fiscal stimulus focusing on investment and financial aid for industrial sectors including the automotive industry, Finance Minister Bruno Le Maire said, giving the first indication of how the government plans to reboot the economy after the coronavirus crisis.

Like other European countries, France has so far focused the heft of emergency spending on benefits for furloughed workers and a vast loan guarantee program to prevent bankruptcies. But the government is now working on a plan for when the confinements are lifted and businesses reopen.

“There will be a necessity for a stimulus plan after the crisis,” Le Maire told a news conference broadcast on social media. “Investment will be the key priority if we want to kick-start our economy and help our economy to recover as quickly as possible.”

France’s efforts to ready a second wave of stimulus underscore concerns that the hundreds of billions of dollars already spent by governments around the world will not be sufficient to cushion the economic blow. While the emergency spending may keep companies and households afloat, it is unclear what lasting damage will be done by a dual shock to demand and supply around the globe.

“Economic recovery in Europe and throughout the world will be long, drawn-out, difficult and costly,” Le Maire said. “There will be no miracle solution and recovery will require countless efforts.”

Target Sectors

Financial help will be focused on key industrial sectors hit by the crisis, Le Maire said, suggesting that consumers may not get a direct boost. He singled out the automotive industry as being in need of help, but added there would be others. Stimulus must also be coordinated in Europe to be effective, he said.

Alongside its own plans, France is lobbying for a European shared fund focused on expanding health-care capacity and helping economic recoveries in the countries hit hardest by the crisis. The spending of that fund should be in line with the European Union’s objectives on climate change and repairing strategic value chains, Le Maire said.

France’s call for a European fund challenges the longtime resistance in northern European countries to any kind of debt mutualization. A Dutch proposal for a fund limited to emergency spending is a step in the right direction, but falls short of France’s ambitions, Le Maire said.

“Either Europe stays true to its political roots and it will thrive. Or Europe gives in to panic and national selfishness and it will disappear,” he said.

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