France may get itself into trouble with the European Union over €35 billion ($51 billion) of loans that it plans to make to continue stimulating its economy, long after it has recovered its economic stability. The loans will be applied to growing markets in electric cars, wind power and broadband, as well as endowments for French universities, and will likely give French companies and education an unfair advantage in competing with the rest of Europe.
Other sectors singled out for investment are innovative small companies, all forms of renewable energy and some areas of IT.
President Nicolas Sarkozy has authorized the new borrowing and much of it may come from money that is being returned to the government from banks anxious to get out from under Government influence now that the banking community appears to have regained some trust. The French government has already had €13 billion returned, around half of the stimulus loans. Sarkozy says that the new loans are a way to fuel long-term economic growth.
The idea was first floated last summer just before the €26 billion euro stimulus package was put together to stave off the financial crisis. But the size of the new investment totals were only brought to light in the past few days by French officials and area almost certainly going to fall foul of guidelines laid down by the EU.
The French government would still have to borrow €20 billion and the level of ongoing budget deficit in France could potentially weaken the Euro.
Sarkozy said that very high-speed broadband would gain €4.5 billion, with €2 billion to get 70% of the population up to 100 Mbps over 10 years and also to seed the costs of putting up a satellite dedicated to high speed internet access at 750,000 homes. The other €2.5 billion will be spent on content and new applications for broadband.