Page last updated at 14:04 GMT, Monday, 2 February 2009

France unveils stimulus package

Francois Fillon
Prime Minister Francois Fillon is initiating 1,000 projects across France

France's Prime Minister Francois Fillon has unveiled a series of measures worth 26bn euros ($33.1bn; 23.5bn) designed to "revitalise" the French economy.

He called for an "urgent national mobilisation" across 1,000 work sites to combat the economic crisis.

The package includes 11bn euros to help businesses and 4bn euros to improve infrastructure and public services.

Earlier on Monday, Finance Minister Christine Lagarde said France would enter recession "at some point".

Production 'collapse'

The French stimulus plan is split into three parts: 11bn euros to help businesses improve their cashflows; 11bn euros of direct state investment; and 4bn euros of investment by state-owned firms for modernising rail infrastructure, energy and the postal service.

I'd be very surprised if we have positive [economic] growth in 2009
Christine Lagarde
French Finance Minister

The government expects that the stimulus package will produce economic growth of around 1.3%.

But Ms Lagarde said this would not be enough to offset the impact of the global downturn this year.

"I'd be very surprised if we have positive [economic] growth in 2009," she said.

The IMF has forecast a contraction in the French economy of 1.9% this year.

Speaking before details of the package were released, Ms Lagarde also said that official figures out later on Monday would show an increase in unemployment of about 45,000 workers in December last year.

She also referred to an "unheard of collapse in industrial production, especially in November and December".

But figures released on Monday showed that manufacturing output in France, along with that in the eurozone as a whole, contracted at a slower rate in January than it did in December.

This has led some analysts to believe that the economic downturn may be easing.

Last week, mass demonstrations broke out as the French vented their displeasure over the government's handling of the economic crisis.

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