The French Prime Minister has announced a five-year programme of tax breaks worth 2.5 billion euros to encourage industrial investment.

Manuel Valls said that the decision to offer these incentives was necessary to “accelerate France’s sluggish economic growth rate”. The French economy grew by just 0.4% in 2014.

Heralded as an “unprecedented measure”, the tax breaks will allow companies to claim back 140% of the value of their industrial investments over a five-year period — and to reduce their business taxes.

Mr Valls said: “To accelerate the economic recovery, we need to remove all the obstacles and use all the tools we can lay our hands on — and investment is a key tool.”

He said the government will also seek to boost investment by spending 3.2 billion euros on improving the motorway system.

The PM also announced that the state-run investment bank will lend an extra 2 billion euros to SMEs, while households will receive tax breaks for home insulation. The Government will also boost its funding to local councils, in the form of advance tax refunds.

These councils account for 70% of public investment, but they cut their investment ‘spend’ by 5.3 billion euros last year, due to the continuing economic downturn in the euro-zone.