French government promises another €20bn in fourth revision of Covid budget

France’s government was set to propose an additional 20 billion euros in Covid relief funds as part of its fourth revised budget of 2020 on Wednesday. Most of the new funds were to aid small companies and workers through four weeks of a new confinement announced by President Emmanuel Macron.

A closed tourist shop in Paris before the national lockdown introduced as part of the new Covid-19 measures to fight a second wave of the disease, 29 October 2020. REUTERS - CHARLES PLATIAU

The new funds would join 470 billion euros of coronavirus relief funds the French government has already put on the table for businesses, employees and households affected by the Covid-19 lockdown and other restrictive health measures.

Even if the current confinement is less strict than the nearly eight-week lockdown stretching from mid-March to early-May, many businesses are struggling and angry about having to reduce or completely suspend their activities. 

More than half of the new package would expand a “solidarity fund” for small companies, adding 10.9 billion euros to the current 9-billion-euro fund, as well as broadening conditions for eligibility. 

An additional 3.2 billion euros would go to a programme designed to keep staff employed by subsidising salaries as long as they are out of work. It adds to 31 billion already budgeted, of which 22 billion has been spent. 

The rest of the new funds would contribute to tax deferrals for companies in difficulty, public health insurance and aid for households affected by poverty and unemployment. 

Forecast revised to 11 percent negative growth

With this fourth budget revision since the start of the Covid epidemic in March, the French state will have put nearly half a trillion euros in economic relief on the table. 

Of the total, 300 billion euros is in the form of state guarantees on loans that would only become public expenditure if the companies receiving them were to default.

The new 20 billion euros in public spending, along with the new economic hit of a partial lockdown, have prompted the government to revise once again its economic outlook for 2020.

Economy and Finance Minister Bruno Le Maire already announced last week the government expected the Gross Domestic Product to contract by 11 percent this year, up from 10 percent in the previous forecast in September. 

The measures are expected to increase the public debt to 119 percent of GDP by the end of 2020, up from about 100 percent in 2019.

Government defends economic response

Ahead of the budget proposal, Le Maire defended the government’s record of economic aid in the National Assembly, the lower house of parliament.

“For eight months, the state has provided massive, immediate and total support to French people, businesses and employees,” Le Maire told MPs in a defence of the government’s economic response to the epidemic on Tuesday.

Depuis 8 mois, l'État a apporté un soutien massif, immédiat et total aux Français, aux entreprises et aux salariés. C'est le pays en Europe qui a le mieux protégé le pouvoir d'achat de ses compatriotes. Je ne laisserai personne dire que nous avons laissé tomber notre économie ! pic.twitter.com/pxqWkoXPFn

— Bruno Le Maire (@BrunoLeMaire) November 3, 2020

“[France] is the European country that has best protected the purchasing power of its people. I will not let anyone say we have abandoned our economy.” 

(with newswires)