France and Germany unveil green recovery plans

French Finance Minister Bruno Le Maire (L) and German Minister of Finance Olaf Scholz(R) give a press conference after an Economic and Financial affairs meeting council (ECOFIN) in Brussels on 12 March 2019. [EPA-EFE/STEPHANIE LECOCQ]

French Economy Minister Bruno Le Maire and German Finance Minister Olaf Scholz unveiled their national recovery and resilience plans at a joint press conference Tuesday (27 April) ahead of the indicative 30 April deadline set by the European Commission.

“It was important for us to make this presentation together, because Germany and France have been working hand in hand since the beginning of the crisis,” said Le Maire, who voiced hope that the French economy would return to 2019 levels by 2022.

“We are not introducing reforms for the benefit of the European Commission. We are introducing reforms for the benefit of French citizens and the nation. The crisis must not divert us from our efforts to respond to the challenges of the French economy,” Le Maire said.

France plans to invest €100 billion through ‘France Relance’, a strategy based on ecology, competitiveness and social and territorial cohesion. Le Maire said that €30 billion had already been disbursed under the programme.

“This recovery plan marks the coming of age of the European Union,” said Le Maire, adding that “the European Union must stop relying on others and must rely on its own strengths”.

Green recovery plans

50% of the French budget allocated to economic recovery should be directed towards ecological transition with “the objective of reducing by 2030 gas emissions by 55% compared to the 1990 levels”, Le Maire added.

This will be achieved in particular through the “great success” of France Relance’s “MaPrimeRenov'” – an energy renovation scheme for homes, for which almost 230,000 applications have been submitted.

The climate and resilience law, due to be voted in the French parliament on 4 May, is also part of this framework, the minister said.

Germany, for its part, has announced that 40% of the budget allocated to the recovery, worth €11 billion – will be earmarked for the climate.

Some 25% of the French budget will also be dedicated to the digital transition, said Le Maire, specifying that the future of Europe must be “based on technological independence, which is key for political sovereignty”. Le Maire also declared the French government’s intention to focus on “industrial relocation”

Germany, meanwhile, will be aiming for a “major digital education initiative”, Scholz announced.

NextGenerationEU

Of the €100 billion French recovery plan, €40 billion is to come from the European Union’s €750 billion recovery fund agreed by EU leaders last July. Germany is expecting €25.6 billion from it.

The fund will be paid out in loans and grants to support reforms and investments as EU countries seek to rebuild their economies, which have been badly hit by the COVID-19 pandemic.

To receive the money, however, the European Commission has specified several criteria: 37% of the expenditure must be devoted to EU environmental objectives – with the overarching goal of carbon neutrality by 2050 – and 20% to the digitalisation of the economy.

Le Maire said France should receive the first €5 billion from the European fund “before the end of the summer”, rather than at the beginning as initially announced.

The two ministers indicated that they would present their recovery plans formally to the Commission on Wednesday, alongside Spain and Italy.

[Edited by Benjamin Fox]

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