New public works plan for France

Lyon - Half the French government jumped aboard a high-speed train to the heart of the country on Monday on a trip to unveil a package of public works projects designed to put the economy back on track.

Four days after more than a million angry strikers marched to demand action to protect jobs and salaries from the global financial storm, Prime Minister Francois Fillon took his top ministers to France's third-biggest city of Lyon.

But, even as they boarded the so-called "Recovery Express", their mission to promote part of a €26bn stimulus package was derailed by more grim news on jobs and growth.

French unemployment surged by 45 000 in December, amid an unprecedented collapse in industrial output as a result of the world economic crisis, Finance Minister Christine Lagarde said.

Briefing reporters onboard the train, Lagarde said the last quarter of 2008 had been marked by an "unheard of ... collapse in industrial production, especially in November and December."

Echoing her message, car makers - whose sector directly or indirectly employs 10% of the French workforce - revealed that sales had fallen 7.9% in January.

With approximately 2 100 000 jobless, France has an unemployment rate of around 8%. The European Commission predicts the rate will hit 9.8% by the end of this year and 10.6% in 2010.

The IMF expects France's economy to shrink by about 1.9% this year, an estimate which Lagarde confirmed, saying: "All the countries of the eurozone will be at about minus two ... we shouldn't have any illusions."

France's official unemployment numbers had been due for release on Thursday last week, but this was delayed because government statisticians were taking part in last week's nationwide one-day strike.

Despite President Nicolas Sarkozy's announcement of a massive stimulus package for industry, trade unions say too little is being done to protect ordinary workers and lift stagnant wages.

The decision to set aside €360bn for French banks, while refusing to boost low pensions or the minimum wage, has fanned public anger.

So Fillon and 18 ministers were heading to Lyon to explain how the government plans to create jobs and counter the slowdown, by pumping part of the €26bn into a major public works programme.

"We are the recovery train. It's an express, with rapid results," Patrick Devedjian, recently named "Recovery Minister" by Sarkozy, told reporters on board the train.

Government spokesperson Luc Chatel said Fillon and his team would unveil 1 000 projects, large and small, to be conducted across the country, focusing on upgrading transport links and public housing stock.

According to a leaked list of the main projects published by Le Figaro, €1.4bn will be spend on research and universities, another €1.4bn on prisons and the justice system and €1.7bn on transport.

Smaller sums will go on culture and heritage projects and defence.

- AFP