While EU member states are kept waiting for the Juncker plan, the French government has announced its own plans to reinvigorate investment. EURACTIV France reports.
On Wednesday, (8 April) the French government launched a series of fiscal measures aimed at boosting investment, as the European Union awaits the Commission’s rescue plan that will breath new life into the bloc’s anaemic economy. It is hoped that the measures, worth €2.5 billion over five years, will encourage businesses to invest in the future. The Juncker Plan will represent 126 times this sum, and will ideally help restart economic growth in Europe, where a lack of new money has held back the recovery.
The French plan will give companies a return of 140% on their industrial investments, reducing their tax burden. French Public Investment Bank capital will also be bolstered, to help it in its role of supporting SMEs.
Finally, the French regional authorities will be offered interest-free loans from the Deposits and Consignments Fund (CDC). But the Prime Minister, Manuel Valls, has not reversed the recent cuts to local authorities, made to appease Brussels, which demanded that France rein in its public spending.
A crucial issue for France
Relaunching investment is crucial for France’s economy. Although levels of consumption and purchasing power remain fairly stable, economists say that a lack of investment is the main issue preventing the return of economic growth. According to the National Institute for Statistics and Economic Studies (INSEE), levels of investment are set to stay the same or rise by 0.1% in the first trimester of this year.
France has committed €8 billion to the Juncker Plan through the CDC and the Public Investment Bank (BPI); investments with the added benefit of being excluded from calculations of the French budget deficit, and which will not affect the country’s ability to reach its 2017 deficit reduction targets.
Paris predicts its economy will grow by around 1% in 2015. The falling value of the euro against the dollar, as well as the relatively low price of oil, should make the deficit reduction objectives easier to achieve.
The tax cuts for businesses announced by the French government on Wednesday were accompanied by a number of social measures, including the creation of a personal activity account for employees. The Prime Minister also criticised business leaders for their sluggishness in fulfilling their employment commitments.
With the new social measures, the government hopes to win back the confidence of the Socialist Party’s left wing, which had threatened to rebel during the party’s June congress in Poitiers.