French prime minister, Jean-Marc Ayrault, has strongly backed his government’s injection of EUR800m (US$1.1bn) into PSA Peugeot-Citroen as an act of “state responsibility.”

The unveiling today (19 February) of a huge capital increase worth EUR3bn in tandem with a similar contribution to that of Paris from PSA partner, Dongfeng, comes as France is struggling to cope with a huge deficit and massive unemployment, but the Prime Minister has thrown his weight behind State intervention for significant industries.

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“This is a major strategic operation for the PSA Group, with which the state is associating itself for the long term,” said Ayrault. “It’s also an act of state responsibility in relation to one of the main industries in the country.

“It is to the benefit of activity and jobs in France.”

Ayrault and his cabinet, mainly through the auspices of its finance and economic redevelopment ministers, Pierre Moscovici and Arnaud Montebourg, maintain the French state will act as “investor, shareholder and partner” for large French businesses.

Noting the government had responded “favourably” to a request from PSA to invest in cooperation with Dongfeng, the prime minister’s statement added the State capital injection would make it one of the automaker’s main shareholders and would allow it to “participate directly in its governance.”

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PSA also noted today former Renault COO, Carlos Tavares, would take over from Philippe Varin as president from 31 March.

From 20 February, Tavares will also assume responsibility for group operations. 

The capital increase is subject to administrative and regulatory approvals by French and Chinese authorities and has to be approved by an extraordinary general meeting of PSA shareholders.

Dongfeng was not immediately available for comment.