France will spend 45 billion euros ($50 billion) to help small businesses and employees struggling with the coronavirus outbreak, the country's finance minister announced Tuesday, after President Emmanuel Macron declared "we are at war" against the virus.
Speaking in a televised address late Monday, Macron told the French people they are only allowed outside their houses for essential trips, such as to buy food and medicines, for a period of two weeks. He also said the French army will be moving coronavirus patients from overwhelmed regions to other parts of France, where there's spare capacity to take care of people; and that there will be "unlimited" state financial aid for businesses.
"We have to mobilize all our forces," Bruno Le Maire, the French finance minister, told RTL radio Tuesday, adding further details to the promises made by Macron.
"We don't want bankruptcies," Le Maire said.
The coronavirus outbreak, which emerged in China late last year, has weighed heavily on all major economies. Airplanes are not taking off as people are avoiding vacations, restaurants and coffee places are working reduced hours in some countries, and other nations are in total lockdown — meaning that only pharmacies and grocery stores are open.
However, Le Maire said he is expecting the French economy to contract by 1% in 2020.
Finance ministers of the euro area — the 19-member region where countries share the euro — said that together their coronavirus-related measures amount to 1% of gross domestic product (GDP) and that their public guarantee schemes and deferred tax payments could reach 10% of euro area GDP.
In addition, the 19 ministers agreed to create an investment initiative totaling up to 65 billion euros to support small and medium-sized companies and health-care systems across the region; to set aside between 8 billion and 20 billion euros to lend to companies; and to create another investment program of 10 billion euros also to support businesses.
"Our commitments of today reflect our strong determination to do whatever it takes to effectively address the current challenges and to restore confidence and support a rapid recovery," Mario Centeno, who chairs the discussions among the euro area finance ministers, said in a statement, echoing the famous words of former European Central Bank President Mario Draghi, which helped to save the euro zone from collapsing in 2012.
Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics, said Monday that "it will take a few days for markets and investors to digest this, but it is a big step in the right direction."
"The EU will need to muster all its fiscal firepower to make sure the virus doesn't leave long-lasting scars on the economy. It doesn't have to," he said in an email.
Meanwhile, the 27 heads of state in Europe are speaking at 5 p.m. Brussels time Tuesday.
They are expected to discuss closing their external borders to non-essential travel for 30 days. This would mean that only supplies of food and medicines would be allowed to enter Europe. Long-term residents, family members of EU citizens, diplomats and health-care workers would be exempted from the ban.
At least eight EU countries have already imposed border restrictions.