The French government said Thursday employment was paramount as it unleashed a mammoth spending plan for the virus-hit economy that has been hemorrhaging jobs.

Prime Minister Jean Castex promised 160,000 new jobs in 2021 as part of a recovery plan worth 100 billion euros ($120 billion), designed to help growth and employment at a time when daily virus numbers in France are on the rise again.

"The ambition and size of this plan are historic," he told reporters after a cabinet meeting backing the stimulus package which he said would help return the French economy to its pre-pandemic level by 2022.

The economy has experienced its worst downward spiral since 1945, with gross domestic product plunging 13.8 percent in the second quarter, after a drop of more than five percent in the first.

French companies will have shed an estimated 800,000 positions this year.

- 'Absolute priority' -

"Our absolute priority is jobs," Castex said.

The budget boost, a combination of new spending and tax breaks, is four times the amount France spent over a decade ago to deal with the global financial crisis, and comes on top of hundreds of billions already spent in an early pandemic response.

"The time for a relaunch has come," tweeted President Emmanuel Macron.

Some 40 billion euros of the plan will be covered by funds from a 750-billion-euro EU-wide plan agreed after much acrimony in July, and the rest by government debt, Castex said.

There will be no tax hikes to pay for the measures, he vowed.

Kathrin Muehlbronner, a vice president at rating agency Moody's, said the "reasonably large" package at around 4.5 percent of GDP would not change Moody's view on France's fiscal strength or credit profile.

The new stimulus is to go beyond the short term.

"This plan is not just designed to dress the wounds from the crisis," Castex told Le Figaro daily.

"It lays the ground for the future," he said, echoing Macron's assertion that its emphasis on decarbonising the economy, improving corporate competitiveness and creating jobs would lay the ground for "the France of 2030".

The economy saw a lively but brief rebound just after the end of lockdown measures in mid-May, but has since shown worrying signs of sliding back again.

- 'A bygone era' -

Much of the new plan targets the corporate sector, including with 35 billion euros' worth of help, much of it in the shape of tax cuts.

But Philippe Martinez, head of the leftist CGT union, faulted the government for failing to extract promises from companies that they would save jobs in return.

"They gave money to Air France and Renault and for what? Job cuts. Is that what public money is for?" he said.

Some 30 billion euros are earmarked for greener policies.

Campaigners said this was too little, and called on the government to demand environmental commitments from companies in return for state help.

"The government is presenting a recovery plan from a bygone era, much less green than it would seem," said Jean-Francois Juilliard, head of Greenpeace France.

"There's nothing about cutting road or air traffic, nothing on any reduction of meat, egg or dairy production which would be needed to cut greenhouse gas emissions," he said.

- Businesses or consumers? -

The government has resisted calls for specific measures to boost consumer spending, saying its heavy financing of partial unemployment measures had already done much to keep consumers' purchasing power intact.

French households have accumulated 80 billion euros in savings since March, significant firepower if people could be induced to spend, analysts say.

Opposition politicians meanwhile said the new money may come too late to save many companies.

"This should have been done before the summer," said centre-right LR party head Christian Jacob.

European stock markets welcomed the stimulus plan, seeing it as a "huge statement of intent", according to Craig Erlam, an analyst with the Oanda trading firm.

"Combined with the (eurozone) recovery package, it's clear the bloc is not going down without a fight," he told AFP.

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