PARIS - PRESIDENT Nicolas Sarkozy was on Thursday to unveil a stimulus plan of some 25 billion euros (S$48.1 billion) to boost consumer spending and keep France's car industry and construction afloat during the global economic slowdown.

France's contribution to a European-wide stimulus drive that could total 200 billion euros, the fiscal plan is set to zero in on the crisis-hit auto sector, the second major victim of the global downturn after the financial industry.

Mr Sarkozy is to present details of the package, estimated by media at between 23 and 28 billion euros, in a speech at midday (7.00 pm Singapore time) in Douai in northern France, home to a major Renault car factory.

Cars and construction, which together account for some four million French jobs, have been hardest hit by a recent spike in the country's jobless figures.

With the Big Three US car makers seeking Congressional backing for a massive bailout, France's national auto champions Renault and Peugeot have announced thousands of job cuts amid a collapse in sales.

Official details of the French stimulus plan have been kept under wraps, but the government has confirmed there will be an 'action plan' for the car sector.

Among key measures, the bonus for car owners who scrap an old vehicle to buy a new one is expected to be lifted from 300 to 1,000 euros in a bid to help shift unsold stocks of close to a million vehicles, media reports said.

Auto manufacturers are also expected to get aid for developing electric and other environmentally friendly cars - although the government is thought to have ruled out a temporary cut in VAT sales tax for the sector.

To help struggling construction firms, Mr Sarkozy is expected to announce a major new social housing project, support for energy-efficient property renovation work and an extension of zero-percent property loans.

The president is also likely to announce a one-off 'Christmas bonus' for the lowest-income French families to boost flagging consumer spending as well as a hike in some unemployment benefits and new subsidised job programmes.

France has so far narrowly escaped the tide of recession stalking the industrialised world but the OECD forecasts it will fall into recession next year, with the economy contracting 0.4 percent.

Meanwhile new data on Thursday confirmed a worrisome rise in the jobless, whose numbers jumped 46,900 in October for the biggest increase in 15 years.

French unemployment, one of Europe's highest, rose to 7.3 per cent in the third quarter of this year, the national statistics body INSEE said. The OECD has forecast it will reach 8.2 per cent next year.

The French employers federation MEDEF has unveiled its own stimulus proposals, calling for cuts in corporate tax, a freeze on employer welfare contributions and an extension of tax breaks for investing in small businesses.

Mr Sarkozy's plan comes on the heels of a 20-billion-euro strategic investment fund launched last month to shield French industry from foreign predators.

The European Commission last week called for an overall package worth 200 billion euros, drawn from national plans and EU funds, to snap Europe's economy out of recession through spending hikes and tax breaks.

The Commission aims to secure backing at an EU summit next week for the target.

To drum up the necessary resources, it has agreed to temporarily relax EU public finance rules, including for repeat offenders such as France, where the public deficit is set to overshoot the EU limit of three per cent of output next year.

Britain last week launched a 20-billion-pound stimulus package of tax cuts, while Germany last month rolled out a 32-billion-euro plan involving temporary tax breaks and infrastructure spending.

But Berlin - one of the few EU countries heading into the current downturn with strong public finances - is strongly resisting calls for broad-based tax cuts to get Europe's biggest economy moving again.

Meanwhile critics have questioned how much of the money announced so far by European governments is new - and how much is simply existing budget allocations re-packaged as stimulus funds. -- AFP