France promises €45 billion to save companies hit by coronavirus
With the French economy expected to contract by 1 percent this year due the Covid-19 pandemic, the government has promised to mobilise €45 billion to help struggling companies. Other measures include the possibility of nationalisation for big businesses.
“The war against the coronavirus is also an economic and financial war,” said Bruno Le Maire, the French finance minister, on Tuesday. It will be a violent and long-lasting conflict, he warned.
He expects the coronavirus outbreak to cut France’s Gross Domestic Product by 1 percent. The entire world economy will face recession.
A large part of the 45 billion euro rescue package includes deferring corporate taxes and social security charges due in March. It also includes state payments to workers temporarily laid off by their employers because of the crisis.
The funds come in addition to the announcement made on Monday by President Emmanuel Macron, that the government will guarantee 300 billion euros of bank loans to businesses.
A “solidarity fund” of one billion euros will also be set up to provide assistance to small, independent companies with a turnover of less than a million euros. The funds are to help businesses which have lost 70 percent of their turnover between March 2019 and March 2020.
“These funds have been set up to provide a safety net for the companies which are not eligible for the other types of financial assistance which have been put in place,” said Le Maire.
The minister added that the government is prepared to use all means necessary to protect big French companies.
“That can be done by recapitalisation. That can be done by taking a stake, I can even use the term nationalisation if necessary,” Le Maire declared.
France along with Spain, Italy and Belgium banned short selling, the borrowing of shares in a falling market with a view to making short-term profit, on Tuesday to calm investors and prevent a deeper plunge in prices.
“We want to avoid speculation on the markets,” Le Maire said.
The minister also added that there was no need for panic buying as there will be no shortage of goods, and no need to stock cash reserves.
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