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French economy

France announces 3 billion euro rescue package for businesses hit by Covid-19

French Public Accounts Minister Gérald Darmanin
French Public Accounts Minister Gérald Darmanin © Reuters

The French government says it will cancel three billion euros worth of social security contributions for businesses affected by the Covid-19 crisis, notably in the restaurant, tourism, culture and sport sectors.

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Gérald Darmanin, deputy minister for public finances told RTL radio station on Sunday that "without a doubt", the country's debt would rise to over 115 percent of gross domestic product (GDP) by the end of the year, a direct result of the government stepping in to prop up the economy.

Since the lockdown to curb the spread of Covid-19 began on 17 March in France, most companies and shops have had to close temporarily, many resorting to what is known as "technical unemployment" whereby the government steps in and helps pay workers' salaries.

The lifting of lockdown measures on 11 May has brought some respite to small shops and services able to put strict hygiene measures in place, but restaurants, bars and large cultural venues remain closed until at least the 2 June.

Major losses during lockdown

The Finance ministry has outlined that the newly announced relief measures will help companies which lost income during the imposed lockdown period.

Under the scheme, companies up to 250 employees in tourism, hotels, culture and events, would be exempt from paying four months worth of social taxes.

While small companies with up to 10 employees, such as hairdressers and retail shops would see all of their social taxes cancelled for the three months of closure.

Social taxes in France, paid by employers, go towards covering the costs of the public health system, education, the social security network, retirement funds and unemployment benefits.

Half a million companies to benefit

According to the minister, some 500,000 companies could benefit from the tax relief measures.

The minister said companies from other sectors who had suffered from the crisis would be able to spread their social contributions out across 36 months without penalties.

Since the beginning of the Covid-19 crisis, 450 billion euros has been spent in government aid for businesses, according to Finance Minister Bruno Le Maire, be it in loans or solidarity funds.

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