Fearing coronavirus recession, France weighs nationalisation of large companies

accreditation
(iStock)
(iStock)

France's finance minister said on Tuesday that he was willing to nationalise 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 €45 billion (R906 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 nationalisation if necessary," he said.

'Economic and financial war'

Le Maire earlier 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 mobilise 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 one percent, that is to say negative growth."

France's national debt will exceed 100 percent of GDP this year, he added, well above the European Union's guidelines of not more than 60%.

France's markets regulator also moved Tuesday to ban short-selling in 92 stocks for the day in a bid to tame the fierce volatility on 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 cheaper, allowing the investor to pocket the difference.

Significant losses

The practice can put immense downward pressure on prices at times when buyer interest is virtually non-existent.

France's Financial Markets Authority (AMF) 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 would last all day Tuesday for stocks especially hard hit when a global sell-off 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 mid-morning, however, gains were being eroded as virus worries once again came to the fore.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
16.26
-0.0%
Rand - Pound
19.83
-0.0%
Rand - Euro
16.77
+0.0%
Rand - Aus dollar
11.57
-0.3%
Rand - Yen
0.12
+0.0%
Gold
1,791.00
+0.1%
Silver
20.41
+0.5%
Palladium
2,269.00
-0.9%
Platinum
960.00
-0.1%
Brent Crude
99.60
+2.2%
Top 40
64,617
0.0%
All Share
71,265
0.0%
Resource 10
65,851
0.0%
Industrial 25
87,063
0.0%
Financial 15
15,964
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders