With no end in sight to Ireland’s commercial woes, Theresa Cummins looks to France’s economic revival plan for possible relief.
The French government revealed a 26 billion euro stimulus plan last week in an effort to counteract the effects of the global downturn, by injecting a huge cash investment into the state.
The plan, which focuses on pumping money into transport, research and development and housing, is the latest attempt by the French government to stimulate the economy.
Speaking about the plans to re-establish confidence in the country, President Nicholas Sarkozy emphasised that the cash injection into the economy was the optimal solution to the downturn. “Our answer to the crisis is a massive investment drive because that is the best way to support businesses and to protect jobs.”
The investment is to be divided up into three parts; eleven billion euro will be allocated to help businesses improve their cash flow, a further eleven billion euro for direct state investment and the remaining four billion euro will be used on rail infrastructure. A combination of tax breaks and other incentives for businesses to the value of 700 million euro are planned in an effort to promote job creation.
The stimulus plan, which will come into effect this week, comes in the wake of the recent strikes by French workers, angered by the economic crisis. Although the French economy has so far managed to avoid slumping into the widespread global recession, the French people have been widely outspoken about their displeasure about the rampant layoffs and bleak economic outlook.
“Our answer to the crisis is a massive investment drive because that is the best way to support businesses and to protect jobs”
Reflecting the age old custom of taking to the streets in times of crisis, workers joined together in a massive protest to display their views on the rising unemployment. “I know that our country is gripped by doubt, by fear and by protests,” the French Prime Minister Francois Fillion said at a press conference in Lyon, after more news on job losses and dismal growth was revealed.
“We are going to fund concrete projects that support business, create work for our companies, that protect jobs.” However Fillion acknowledged that the stimulus plan would not be enough to shelter the economy entirely. The International Monetary Fund has forecast negative growth in the economy of 1.9 per cent this year. French unemployment figures increased by 45,800 in December, an increase of 11.4 per cent over a year.
The plan has received a mixed reaction from economists and the opposition Socialist Party, who claim the government is “dressing up old spending as new.” Economists have questioned whether the money comes from existing budget allocations, disguised as stimulus funds.
According to a recent poll, 62 per cent of French voters do not consider the stimulus plan to be an effective measure against the downturn, despite predictions by the government that the package should produce economic growth of 1.3 per cent.
“France is no exception to a trend that is affecting the whole of the world,” Fillon pointed out. “What we hope is that the measures we are now taking will help France to improve its outlook.”
As students took to Dublin’s streets and workers locked themselves in the Waterford Crystal factories, there’s no doubt that both Irish and French politicians are hoping that rescue packages will be enough to placate their populations. If not, there could well be a stormy period ahead.