France to build to escape crisis

LARGE public infrastructure projects will be the cornerstone of pulling France through the economic downturn.

President Sarkozy is expected to announce that medium-term building projects such as extending the electricity, rail and gas networks will be brought forward to help the construction industry.

The sector, which employees 1.5 million people, has been hit by a slump in the housing market.

The total cost of the rescue package could reach €28 billion – just under the limit of GDP allowed by the European Commission for countries to finance their own industries.

Households will be encouraged to begin building work by an increase in the interest-free loans made available for environmental improvements. (The current amount – available from January 1 - is €30,000).

These are for improvements in areas such as insulation or installing green power sources.

Other loans could be made available to those buying new homes that already conform to government insulation and heating standards. The government has already commissioned the renovation of social housing.

Sarkozy’s speech will take place at Douai, near to a Renault car plant – a symbolic gesture of support to the flagging vehicle manufacturing industry.

While the president is expected to announce that there will be no direct aid to manufacturers, a special fund will be set up to encourage investment and research into cleaner, less-polluting vehicles.

The sale of new cars dropped 14% in November and to boost this, the prime à la casse payment to those who scrap old cars to buy new low-polluting models could rise to €1,000.

The president has denied that there will be any reduction in VAT in this sector, however procedures to reimburse VAT payments could be sped up.

The government plans to launch a study into the creation of a fund to boost investment into research of less-polluting cars, such as electric ones.

Businesses will be helped via the extension of deadlines to pay taxes and social charges. Bodies that deal with reimbursements in case of overpayment, such as Urssaf, will be asked to speed up the process.

Those in line to receive the new RSA income support benefit could also find themselves with a cheque from the government. Civil servants have said the payment could help boost spending power among poorer households.

Photo:Afp/Gerard Cerles