Cost of French stimulus plan exceeds effect on growth: study

14th September 2010, Comments 0 comments

The cost of the French government's economic stimulus plan has far exceeded the value of its impact on growth, but the measures have managed to limit a slide in investment and business failures, the state auditing body said Tuesday in a report.

The Cour des Comptes put the budgetary cost of the plan at around 34 billion euros (44 billion dollars) in 2009 and 2010. The cost of the measures to public finances amounted to about 1.4 percent of gross domestic product, according to the study.

While the plan's effect on economic growth has been difficult to measure, the Cour des Comptes nonetheless evaluated its impact at around 0.5 percent last year.

But it cautioned that most estimates do not take into account an upward revision in the value of the scheme, initially put at 26 billion euros.

The study said the difference between the cost and the impact on growth reflected "the fact that many of the plan's components will have served to shore up corporate finances but without having an immediate effect on economic activity."

The minister responsible for the plan, Patrick Devedjian, reacting to the report, told AFP: "France had the mildest recession in Europe and the OECD (group of industrialised countries), at minus 2.5 percent in 2009."

The government says the plan helped create or preserve 400,000 jobs in 2009 and 2010. The Cour des Comptes estimates that between 18,000 and 72,000 jobs have been created or saved.

The head of the Cour, Didier Migaud, presenting the report to a parliamentary commission, added that the measures in any case "helped avoid or postpone business failures."

© 2010 AFP

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