France will reacquaint with its interventionist roots tomorrow when President Sarkozy unveils a multi-billion euro package designed to stimulate a flagging economy through investment, subsides and tax cuts.

The measures come amid acute concern over rising unemployment, but also a sense of satisfaction at what the French widely see as the death of anglo-saxon liberalism.

The Gallic contribution to Europe's €200 billion bid to steer away from recession represents a return to the dirigiste policies associated with French leaders from Napoleon to General Charles de Gaulle.

Mr Sarkozy will announce help for the poor, for French industry and for the housing sector.

His package will include a widely flagged payment of €1,000 to families who trade in old vehicles for new ones under a policy designed to kickstart the country's ailing car industry whilst cutting car dioxide pollution.

With sales of new cars falling by 14 per cent last month in France, Renault, Peugeot and Citroen have announced a total of more than 8,000 job cuts.

“In France we believe in the future of the car industry because it counts for 10 percent of jobs, that's 2.5 million jobs if we include production, subcontractors and distribution,” said Luc Chatel, the French Government spokesman.

Other measures likely to feature in the French stimulus include a 'crisis welfare payment' to poor families, infrastructure projects and up to €10 billion investment in public housing projects.

But with Europe's leaders unable to agree on a unified anti-recession programme, Mr Sarkozy appears unlikely to follow Gordon Brown's lead with a across-the-board cut in VAT to boost high street spending.

Instead, he is likely to chisel his fiscal policy, notably by enabling businesses to deduct investment costs from corporate tax returns.

The French plan is reported to be worth about €20 billion - slightly less than the British stimulus announced last month - but nevertheless sufficient to push the country's budget deficit above the three per cent ceiling fixed under eurozone rules.

The European Commission has indicated it will allow the ceiling to be breached during the crisis.

The French package comes after Germany last month announced a €32 billion stimulus.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts