Recovery plan: France will receive 40 billion euros from the European Union

Through News writing
Published on 24 June 21 at 10:21

French President Emmanuel Macron and European Commission President Ursula Von der Leyen, June 23, 2021 in Paris. (© AFP / Ludovic MARIN)

To reinvigorate its economy, France will touch 39.4 billion euros from the European Union, which validated on Wednesday 23 June 2021 on Recovery plan financed in part by an unprecedented common European loan and will pay a first check this summer in Paris.

“I am happy to announce that the Commission supports the French stimulus plan,” said Ursula von der Leyen all smiles from the Elysee gardens, holding up with Emmanuel Macron the approval file for the French plan.

“This corresponds to the payment of 40 billion euros to France until 2026, an extremely substantial contribution ”, indicated the president.

This will allow “to deploy an ambitious policy in terms of ecology, competitiveness, social and territorial cohesion”, he added.

Ecological transition

In total, the government has planned a recovery plan of 100 billion euros, including 39.4 billion financed by these direct subsidies.

“We will be able to receive, during the month of July, the first European payment in the amount of 5 billion euros,” said the Minister of the Economy Bruno Le Maire.

A second payment of 5 billion will be made in the fall, according to European and French sources.

Almost half of European aid will be dedicated to ecological transition, with 5.8 billion euros for the energy renovation of buildings, 4.4 billion for modernize the rail network and 1.9 billion for develop carbon-free hydrogen, indicates the Commission in a press release.

A little more than 8 billion euros will be devoted to digitization of businesses, schools and administrations, while the rest of the envelope must finance, in particular, expenditure in favor of youth employment and apprenticeship, the modernization of the health system and vocational training programs.

The Minister of the Economy Bruno Le Maire leaving the Elysee Palace on June 23, 2021 in Paris.
The Minister of the Economy Bruno Le Maire leaving the Elysee Palace on June 23, 2021 in Paris. (© AFP / Ludovic MARIN)

“The French economy is recovering”

France is in the nails of the Brussels criteria, which set at least 37% of spending for the ecological transition and 20% for the digital transition.

“This plan will accelerate the green and economic transition throughout the country” and “will finance a great wave of energy renovation, including for social housing” estimated Ursula von der Leyen.

Bruno Le Maire, who then visited with him a research site of the Commissariat for Atomic Energy and Alternative Energies (CEA), estimated that “the French economy is recovering”: “We have a 19% increase of spending by the French compared to the same week in 2019. This is proof that the recovery is going quickly. “

At the end of May, of the 100 billion euros planned, Paris had already contracted 36 billion, including 10 billion on the ecology component, 15 billion on the competitiveness component (including 10 billion in reduction in production taxes) and 11 billion on the social and territorial cohesion. The government’s objective is to increase to 70 billion euros committed by the end of the year.

According to a simulation, this plan could contribute to increase French GDP by 12% over 20 years, a European source told AFP.

French President Emmanuel Macron (3rd d) and President of the European Commission Ursula Von der Leyen (2nd g), June 23, 2021 in Paris.
French President Emmanuel Macron (3rd d) and President of the European Commission Ursula Von der Leyen (2nd g), June 23, 2021 in Paris. (© POOL / AFP / GONZALO FUENTES)

Structural reforms

Member States had to match their plan with structural reforms, called for by the EU.

Brussels “considers that France’s plan provides for a vast set of reforms and investments which (…) contribute to effectively meeting all or a significant part of the economic and social challenges identified in the recommendations addressed to France”, the Commission indicated in its press release, without mentioning the sensitive issue of pension reform, long claimed by the EU.

In its plan, Paris has taken over a large part of the reforms adopted since 2017: housing policy, climate law and the law simplifying public action and business life.

The EU started borrowing on financial markets in mid-June to finance this plan to overcome the economic consequences of the pandemic.

The common use of borrowing will make it possible to pay 672 billion euros in grants and loans to member countries. “Never seen since the Marshall Plan”, according to Ursula von der Leyen.

Spain, with 70 billion in direct subsidies, and Italy (68.9 billion) are the main beneficiaries of this mega-plan.

Formally, the final green light for national plans will be given by the Council, which represents the Member States. The first positive reviews are expected on July 13.

Source: © 2021 AFP

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