PARIS (AFP) — France’s finance minister said Tuesday that he was willing to nationalize large companies to protect them from bankruptcy, while warning that the country faces recession this year as the coronavirus epidemic sinks the economy.
Bruno Le Maire announced a $50 billion aid package to help businesses and employees cope with the escalating health crisis.
“I will not hesitate to use any means at my disposal to protect large French enterprises,” the minister said during a conference call with journalists.
“This can be through capital injections or stake purchases. I can even use the term nationalization if necessary,” he said.
Le Maire has described the struggle against the coronavirus pandemic as an “economic and financial war.”
“It will be lengthy, it will be violent. … This war will require us to mobilize all our forces,” he told RTL radio.
Additional economic support measures will be announced shortly, he said, and will be based “on a growth forecast of minus 1%, that is to say, negative growth.”
France’s national debt will exceed 100% of GDP this year, he said, well above the European Union’s guidelines of not more than 60%.
France’s markets regulator moved Tuesday to ban short-selling in 92 stocks for the day in a bid to tame the fierce volatility of financial markets as nervous investors try to assess the virus’ economic toll.
Short-selling involves borrowing shares to sell them, effectively betting their price will fall so they can be bought back more cheaply, allowing the investor to pocket the difference.
The practice can put immense downward pressure on prices at times when buyer interest is virtually nonexistent.
France’s Financial Markets Authority said that “taking into account the significant losses in recent days on the financial markets” it had decided “an urgent step” was needed.
The short-selling ban was to last all day Tuesday for stocks especially hard hit as a global selloff saw Wall Street plunge nearly 13% on Monday.
Le Maire said he was prepared to impose a short-selling ban of up to a month if necessary.
The Paris market, like its European peers, did slightly better in early trade Tuesday, gaining 4.0%, helped in part by the short-selling ban, dealers said.
By midmorning, however, gains were being eroded as virus worries once again came to the fore.
Italy on Monday said it intends to renationalize the bankrupt former national carrier Alitalia under an emergency economic rescue plan for the pandemic.
Details were outlined in a government decree published late Monday.
Italian media reported that it could cost taxpayers up to 600 million euros ($670 million).
Prime Minister Giuseppe Conte’s government agreed to a 25-billion-euro rescue designed to shield families and businesses from the economic fallout of an outbreak that has killed more than 2,100 people in Italy.
One of the measures provides for the creation of “a new company wholly controlled by the ministry of economy and finance, or controlled by a company with a majority public stake, including an indirect one” to take over the airline.
Italy’s AGI news agency said the government was setting up a 600 million euro fund to deal with the damage the pandemic has caused to the aviation sector.
Final details of the Italian economic rescue program are to be completed next month.
Alitalia has floundered in the face of fierce competition from low-cost carriers such as EasyJet and Ryanair.
But analysts warn that it is also too small and has too many staff for the number of flights it operates to compete with its rivals.
It flew only 22 million passengers and saw its market share in Italy slip to 14% in 2018.
Germany’s Lufthansa and the Atlanta-based Delta Airlines each carried around 180 million passengers that year.
Alitalia’s attempts to secure rescues from either the Italian state railway Ferrovie dello Stato or Lufthansa floundered in January.
The company filed for bankruptcy in 2017.
© Agence France-Presse