- France Relance totals €100 billion, of which €40 billion comes from European funds.
- It rests on three pillars, ecology, competitiveness and cohesion, with a cut in production taxes.
- It is the mirror in which other national plans will be viewed, including Spain’s.
On 3 September 2020 the French prime minister, Jean Castex, presented France Relance, the French government’s recovery plan: €100 billion, of which €40 billion comes from the European Union. The announcement had been postponed by a week. It is organised around three pillars (ecology, business competitiveness and social cohesion) and is framed as a supply-side plan, that is, aimed at strengthening productive capacity rather than directly stimulating consumption.
France is the leading destination for Spanish exports and one of Spain’s main trading and investment partners. What its government decides on energy, industry, transport or business taxation shapes opportunities and competition in a key market for many Spanish companies, Catalan ones included, and it is also a clue to where other European countries will head. That is why, in Barcelona, Madrid or Valencia, a plan presented in Paris is analysed in the finance and strategy departments of companies with cross-border business.
The pillars of the plan
The ecological pillar concentrates investment in the energy renovation of buildings, clean transport and hydrogen, among other areas. The competitiveness pillar includes support for industry and innovation. The social cohesion pillar is directed at employment, in particular for young people, and at territorial solidarity. It is a combination of green transition, industrial strengthening and social measures that recalls the European plans. Each of these items will be rolled out over the following two years, so the effect on the real economy will not be immediate.
The government insisted there would be no tax increases and presented the plan as a bet on supply. A prominent element was the cut in production taxes paid by companies, a levy applied to activity rather than profit, which French companies had long criticised compared with their European competitors.
What it means for Spain
National recovery plans are financed partly by the European fund agreed in July, and each country designs its own. Comparing them shows where competition lies: who cuts production taxes, who subsidises industrial renewal, who prioritises hydrogen or digitalisation. That comparison is useful for any company that looks to Europe as a market.
For Spanish companies with customers, suppliers or subsidiaries in France, the plan opens opportunities for tenders and collaboration, and may also put pressure on prices in sectors where French companies will receive support. On the tax side, a lower burden on production may improve the competitive position of French rivals against Spanish ones. Public support is subject to European competition rules, and the Commission monitors that it does not distort the single market beyond what the temporary framework in force allows.
What to review
Anyone operating in France should find out about the calls and support schemes that open and whether their legal structure allows access, because many are aimed at companies established in the country. Those who export or compete with French companies should compare labour, tax and energy costs with those of their direct rivals.
For business owners and families with investments, public plans can create sector opportunities but also excessive expectations. Announcements are not execution: they take time to reach the real economy and not all projects meet their deadlines. This note is informative and is not an investment recommendation. If your business depends on a single market, this is a good opportunity to review your exposure.
Looking at the neighbours’ plans helps to understand whom you are competing against.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
