France ready to spend more amid record surge in unemployment
By WILLIAM HOROBIN | Bloomberg | Published: November 14, 2020
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France is prepared to further ramp up spending to support any firm, from mom-and-pop shops to its national flag carrier, as rising unemployment and a resurgence of the Covid-19 pandemic cast a longer shadow over the economy.
Finance Minister Minister Bruno Le Maire pledged that if needed the state will pump more public money into Air France and expand funding for smaller companies. The government will also consider targeted measures for shopkeepers in a response to an outcry over the government's second lockdown.
Le Maire's comments came just hours before fresh data underscored the urgency of the situation. France's unemployment rate jumped by a record to 9% in the third quarter. That's the highest level in two years.
"There is no limit to supporting shopkeepers and the economy because the worst thing would be tens of thousands of companies closing, having people unemployed and losing skills," the finance minister said as he fielding questions from entrepreneurs for over 90 minutes on live television Monday evening.
France is entering a critical phase in its fight to contain a resurgence of the virus that's putting pressure on intensive care units already nearing capacity. Later this week, authorities will assess whether to adjust lockdown measures that have been in force since Oct. 30 and are currently expected to remain in place until Dec. 1.
For the second lockdown, the government has massively increased its so-called solidarity fund, which provides direct support for companies forced to close, or in sectors where incomes have collapsed. For November alone, it's expected to disburse 6 billion euros ($7.1 billion) -- matching the total outlay made since March.
Le Maire said he could further boost that fund as part of a review of the 100 billion-euro stimulus program the government launched in September to support the economy in coming years.
"If it is necessary to supplement the recovery program with new support measures like the solidarity fund, we will do it because our policy is to continue to protect until the virus has disappeared," Le Maire said.
He said the 7 billion euros of aid the state has already provided to Air France will not be enough because air transport has not recovered.
For smaller businesses, the government will examine measures to help clothing and toy shops that struggle to sell stocks they built in preparation for the end of the year. The state is also ready to raise tax breaks for landlords that cancel rents in November, Le Maire said.
In some better news for France, industrial figures on Tuesday showed output rose more than forecast in September. Production increased in all sectors, although levels are still well below 2019 and the second lockdown is starting to weigh on the auto sector.