Sarkozy unveils €26bn stimulus plan for France

President Nicolas Sarkozy unveiled a €26 billion $32.9 billion) stimulus plan for the faltering French economy this afternoon, targeting investment projects rather than directly aiding consumers.

France is the latest European Union country to open state coffers to try to temper the sharp economic downturn and presidential officials said the measures would cost the equivalent of 1.3 per cent of gross domestic product (GDP).

The plan earmarks €10.5 billion for infrastructure, research and support for local authorities, according to background documents handed out by Mr Sarkozy's office.

It also included moves to help the ailing auto industry, which Mr Sarkozy said employed 10 per cent of the workforce directly or indirectly, encouraging people to scrap older vehicles and buy new, more environmentally-friendly models.

The package is expected to boost French growth by around 0.6 per cent next year, but will also push the deficit to 3.9 per cent of GDP against a previous target of 3.1 per cent and add €20 billion to the public debt mountain.

Reuters