France’s Finance Minister Bruno Le Maire stated he has not signed off on a 5 billion euro ($5.47 billion) state-guaranteed loan to help French automaker Renault cope with the fallout from the ongoing coronavirus crisis, and that discussions continued.
Le Maire informed newspaper Le Figaro that the government was looking for commitments from automakers in three areas in return for help: electric vehicles; the fair treatment of sub-contractors; and that they base hi-tech activities in the country.
“Renault is fighting for its survival,” Le Maire stated in the interview. “I haven’t yet signed the loan.”
Le Maire said France’s response to the worst depression since World War Two amounted to 450 billion euros ($490 billion) in aid and state guarantees – 20% of France’s annual national output.
The government forecasts that the country’s economy will shrink at least 8% this year. Its budget deficit is set to hit a post-war record of 9% of economic output in 2020.
The European Union has granted member countries all the fiscal leeway they need to deal with the economic impact of the coronavirus, allowing governments to open the spending taps and wave aside EU budget regulations that limit government borrowing.
There is no time limit set in the flexibility clause permitting this. Le Maire said he hoped the rules would remain suspended in next year.
“Nothing would be worse than reviving the economic machine while applying the brake on public spending,” Le Maire said.