The plan to be announced 'within the next ten days,' would 'confront' the difficulties faced by the French economy, Mr Sarkozy said in the northern city of Valenciennes, near the Belgian border.

The latest initiative would help shore up the automobile industry and construction sector among others and comes on the heels of a 20-billion-euro (US$39.2 billion) strategic investment fund launched last week.

Mr Sarkozy last week announced that his government was working on a package of measures to revive the French economy and on Monday he met with German Chancellor Angela Merkel to discuss a Europe-wide rescue plan.

The European Commission is on Wednesday to present a coordinated multi-billion euro package of national measures, totalling 130 billion euros, or one percent of GDP of the EU's 27 member-states.

Facing an economic downturn, Britain on Monday announced a 20 billion pound package to fire up consumer spending.

Germany announced earlier this month a raft of measures including tax breaks and infrastructure spending that it says is worth 32 billion euros over two years to stimulate economic activity.

France has a strong tradition of economic patriotism, with the state readily stepping in with huge bailouts for its industrial champions when they fall on hard times.

Mr Sarkozy has notably said he will not allow France's car industry, which employs 10 per cent of the labour force, to collapse in the face of plunging demand.

French auto makers Renault and PSA Peugeot Citroen have announced thousands of job cuts.

Meeting with employment officials in an area hard-hit by joblessness, Mr Sarkozy said he would request that rules for unemployment benefits be eased to allow for more part-time work.

France has so far narrowly escaped recession, defined as two successive quarters of negative growth.

But the Organisation for Economic Cooperation and Development forecast on Tuesday that the country would fall into recession, with the economy contracting by 0.4 per cent next year. -- AFP