France to unveil 'massive' stimulus this week to stop youth unemployment soaring

France will unveil “massive” support for youth employment this week and a new broad stimulus plan including tax cuts for companies at the end of August, Finance Minister Bruno Le Maire has said.

The measures will be in addition to emergency aid to protect jobs and companies during the lockdown and a series of support plans for sectors including tourism and auto and aircraft manufacturing.

“It can go very high,” Mr Le Maire said, when asked if the stimulus plan would be between €50bn and €100bn. 

The French government is seeking a balance between rebooting a convalescent economy and not overburdening stretched public finances. 

Recent indicators show consumer spending may be recovering faster than expected from the coronovirus lockdown, while public debt is already forecast to rise to over 120% of economic output.

But the government has warned the outlook is poor for later this year, particularly in the jobs market where it expects 800,000 job losses in 2020.

“The prime minister and president will this week announce a massive, immediate, and effective plan for youth employment,” Mr Le Maire said. 

The broader stimulus plan late August will have a strategic objective of further boosting job creation and an ambition to accelerate the transition toward a low-emission economy, he said.

“When difficult times come, we’ll be glad to be able to present new support for businesses at the end of August to tell them we will cut your taxes to make you more competitive, we will invest in an ecological transition,” Mr Le Maire said.

The French finance minister also repeated a pledge to not raise taxes between now and the end of President Emmanuel Macron’s mandate in 2022. 

He said there would be support for low-income households, although no blanket measures to consumers, like cuts to sales tax.

Meanwhile, joint borrowing by EU countries to finance a fund to recover from the economic crisis caused by the Covid-19 pandemic is not charity, Spanish Foreign Minister Arancha Gonzalez said ahead of a crucial summit on the issue this Friday and Saturday. 

All the countries involved would contribute to reimbursing the debt, even northern countries dubbed “frugal”, she said. 

“It is not like the Netherlands is providing charity to Spain or France,” Ms Gonzalez said. 

Each country would take a share of the debt proportional to its economic weight, she said.

Germany would contribute 20%, Spain 9%, and the Netherlands 6%, for instance, said Ms Gonzalez.

The 27 EU leaders are due to meet later this week to negotiate the seven-year EU budget and the creation of a €750bn  stimulus fund financed with common debt.

Two-thirds of the amount would be transferred in form of free grants and a third in repayable loans.

The creation of that fund has pitched the wealthy north against the high-debt south, which has been hit harder by the pandemic.

In Germany, Health Minister Jens Spahn has said Germany can prevent a second wave of the coronavirus in the autumn if people stay vigilant, particularly during the summer vacation season,  

Mr Spahn told a news conference it was important to remain alert when travelling abroad and said he was worried by pictures showing holidaymakers partying in Mallorca at the weekend and ignoring social distancing rules.

“I understand the impatience, but where there are parties the infection risk is particularly high,” he said.

“That’s why we have to try particularly now in the holiday season to prevent infections. We don’t automatically have to expect a second wave in the autumn and winter. Together, as a society, we can prevent that, as we did once before: breaking the wave and keeping the pandemic in check,” Mr Jens said.  

He added that more than 15.5 million people had installed Germany’s coronavirus warning app and that 500,000 people were tested for COVID-19 last week, the most since the crisis began.

Meanwhile, concern about poor working conditions in the meat industry after repeated coronavirus outbreaks at slaughterhouses may speed up a trend among Germans to opt for higher-priced, better quality meat and vegetarian and vegan substitutes.

Europe’s biggest pork producer and home to 1,500 varieties of sausage, has seen meat consumption decline for years as people buy less of it driven by health reasons and concerns for animal welfare.

The coronavirus pandemic may have added a further reason to the list, after outbreaks at slaughterhouses and meatpacking plants drew the public’s attention to the industry’s use of subcontracted workers from eastern Europe who live in cramped accommodation.

“We see a trend away from very cheap meat and towards higher quality and substitute products,” said Robert Kecskes, an analyst from the market research company GfK.

“It is not only about animal welfare, it is about human welfare, and that will become entrenched in people’s minds. In this respect, the meat industry will definitely have a hard time in the near future,” he said. 

Some 600,000 people around Guetersloh, in the western state of North Rhine-Westphalia, were forced back into lockdown on June 23 after more than 1,500 workers at the Toennies slaughterhouse and meatpacking plant tested positive for Covid-19.

The plant has provisionally been ordered to close until July 17. Health and safety officials continue to inspect it and are negotiating with the company over a proposed new hygiene plan.

Toennies has came under fire from politicians for requesting government support to cover quarantined workers’ pay.

German Agriculture Minister Kloeckner announced after the outbreak plans for a raft of measures to address what she calls the “serious consequences” of downward meat price pressures on animal welfare, working conditions and farmers’ incomes, even at the risk of driving business abroad.

Sales of processed meat have steadily fallen in Germany in the last five years, according to market data firm Euromonitor, while sales of meat substitutes have risen 12% over the same period in 2019.




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