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France to Release Additional €20 Billion as Economy Slows

Posted on Nov. 5, 2020

Facing an 11.3 percent deficit, France will release an additional €20 billion in spending to combat the economic effects of a second coronavirus lockdown that has left businesses and households scrambling.

Finance Minister Bruno Le Maire and Public Accounts Minister Olivier Dussopt announced the fourth revision to France's 2020 budget at a November 4 National Assembly Finance Committee meeting. The additional €20 billion adds €10.9 billion to the solidarity fund for small businesses, €3.2 billion to furlough funding, €3 billion for employer tax relief, €1.9 billion for health spending, and €1.1 billion to support low-income households.

The increased funding brings France’s public spending to 64.3 percent of GDP so far this year. France has already spent nearly €470 billion on pandemic-related expenses and economic relief since March.

By expanding the solidarity fund established in June, businesses with up to 50 employees are now able to receive up to €10,000 in emergency funding. This was previously limited to €1,500 for businesses with up to 10 employees.

The measure also extends the social contribution exemptions for employers and partial unemployment, which reimburses employers up to 70 percent of employees’ wages and 100 percent of wages in closed sectors.

Le Maire and Dussopt also announced the creation of a tax credit of up to 30 percent for landlords of small and medium-size businesses who agree to give up one month’s rent.

France announced in September that it would roll out €42 billion in stimulus funding, including €20 billion in production tax cuts for domestic industry over two years. The stimulus is part of a a €100 billion stimulus package intended to create more jobs and promote the country’s green energy transition.

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