Car industry

Sarkozy said: "Our answer to this crisis is investment because it is the best way to support growth and save the jobs of today, and the only way to prepare for the jobs of tomorrow."

The plan includes $5bn to be spent on investment for state-owned rail, energy and postal companies, including a pledge to speed up major infrastructure projects such as fast speed train links in western France.

A further $5bn will be channelled to sustainable development, higher education and defence industries.

The plan also includes help for the country's ailing car industry, which Sarkozy said employed 10 per cent of the workforce directly or indirectly, with incentives offered to scrap older vehicles and buy new, more environmentally-friendly models. 

The economic stimulus is expected to boost French growth by around 0.6 per cent next year, but will also push the deficit to 3.9 per cent of GDP against a previous target of 3.1 per cent.

This is well above the usual 3 per cent ceiling demanded by the EU, however member states have been given the green light to exceed budget limits given the crisis and France said it would bring the deficit close to one per cent of GDP in 2012.

Tax breaks

Besides the $33bn package, the French government also promised to give companies $14.5bn of credits and tax breaks on investment in 2009, rather than over an originally planned three-year period.

Last week, the European Commission called for an EU-wide fiscal stimulus package worth $260bn in an attempt to stem the continent's recession.

Many countries are already working on such plans, but are adopting differing approaches.

While France is focusing on investment, Britain has prepared a $30bn package of tax cuts and spending to help small businesses, low earners and households.

Germany has unveiled a plan worth $39bn, or 1.25 per cent of GDP, but is refusing to deliver tax cuts to help stimulate economic growth despite having much more room for budgetary manoeuvre than many of its neighbours.

Unlike Germany, France narrowly escaped recession in the third quarter of 2008, but analysts expect a sharp contraction in the last three months of the year as order books empty and consumer spending falls.

Unemployment is also on the rise, hitting 7.7 per cent in the third quarter from 7.6 per cent in the second quarter, according to data released on Thursday.