France is to create a sovereign wealth fund to invest in the country’s industries. The idea, as outlined by President Nicolas Sarkozy, is to stop French companies being bought up by foreigners if they become vulnerable to takeover as a result of the financial crisis.
Sarkozy spoke as new reports showed that consumer spending by the French unexpectedly increased last month though business confidence in France fell to its lowest level since December 1993.
After visiting a factory in southern France, Sarkozy spoke about state efforts to cushion the effects of the crisis on the real economy. He said: “If we’d allowed the banks to go bankrupt – as the Americans did, unfortunately, with Lehman Brothers – the bankruptcy of the banks, effects workers, pensioners, savers. They’re the people who pay the price. It would be the small and medium size businesses that wouldn’t have been able to get financing.”
Sarkozy’s plan to “massively intervene” to buy shares of companies considered to be of strategic importance and keep them French, has been criticised by some economists and other European governments have not been enthusiastic; indeed Germany said such moves are not necessary there.