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France unveils $33B stimulus plan

  • Story Highlights
  • French government to spend $33 billion in effort to bolster economy
  • French PM Fillon hopes package will stimulate 1.3 percent in 2009
  • Unemployment rose by 45,000 in December, according to French finance minister
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(CNN) -- French Prime Minister Francois Fillon unveiled further details Monday of a 26 billion-euro ($33 billion) business stimulus package which his government hopes can stall falling growth and prevent the country joining other major European economies in recession.

Up to 1,000 projects will benefit from the package, which was first proposed by President Nicolas Sarkozy in December and approved by French lawmakers last week.

Around 20 billion euros of the total amount will be spent over the next 12 months. Businesses will receive 11.4 billion euros while the same amount will be invested in public projects with social housing identified as a priority. The final 4 billion euros will be spent on improving France's transport, energy and postal service infrastructure.

The package is expected to stimulate economic growth of around 1.3 percent, Fillon said. France has so far avoided the worst of the recession that has gripped many of its western European neighbors, including Germany and the UK.

But unemployment rose by a further 45,000 in December after surging by 64,000 in November, French Finance Minister Christine Lagarde said Monday, adding that she would be "very surprised" if France experienced positive growth in 2009.

Speaking to CNN this weekend at the World Economic Forum in Davos, Switzerland, Lagarde, defended the case for public spending in the face of fears that stimulus packages amounted to storing up unmanageable debts for future generations.

"When the house is on fire we don't look at what can be built, Lagarde said. "We need to kick start (the economy) and we need to restore confidence."

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