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By Tamora Vidaillet
PARIS, Dec 19 (Reuters) - France stands ready to pump more aid into its ailing economy next year on top of the 26 billion euro ($36.3 billion) stimulus package unveiled this month, Economy Minister Christine Lagarde said on Friday.
The comments came as cabinet signed off on the package, with the challenge facing the economy underlined by a grim forecast from statistics office INSEE. It said on Friday that France was heading for deep recession in the coming months.
"We will do what is necessary...it is imperative that we respond in a vigorous and rapid manner to the economic shocks facing every economy today and notably France," Lagarde told reporters after the cabinet meeting.
"If more action is needed, we will have to do more," she said, and noted that six European Union countries were working on new stimulus plans that were expected next month.
Lagarde refused to issue a fresh growth outlook for next year, given the uncertainty facing forecasters, and stuck to an official prognosis for growth of between 0.2 and 0.5 percent.
She said the 26 billion stimulus package announced on Dec. 4, which aims to support investment and help certain industries such as carmakers and builders, would add an extra one percent to gross domestic product.
"And the impact will be felt in 2009 because we are investing massively from the start," she said.
Forecasts from the French national statistics office INSEE had only partially taken into account the impact of European stimulus measures that would be implemented, she added.
Budget Minister Eric Woerth, also present at a news conference, suggested any revisions may not come for months.
"We are not going to rush into revising growth...we will see at the end of the first half," said Woerth.
The comments came hot on the heels of new data pointing to a sharp and potentially prolonged downturn in the economy, where job cuts, factory shutdowns and gathering indications of consumer gloom have become daily news.
INSEE's monthly business sentiment survey sank to the lowest level seen in its 32-year history, matching a previous low from June 1993, with company chiefs fretting over thinning order books and swelling stocks of unsold finished products.
In a quarterly report on the economy issued separately, INSEE said France appeared set to contract by 0.8 percent in the final three months of this year and to continue shrinking in the first two quarters of 2009.
With downbeat data accumulating, some economists say even that prognosis could prove optimistic, casting doubt on the government's own predictions.
Underscoring persistent difficulties within the financial system, Lagarde said lending to small and medium firms in France was broadly on track thanks to measures taken by the government but that financing was proving tough for large firms.
Banks, representatives of which met with Lagarde earlier on Friday, needed to ensure that they kept the financing taps open to such companies, she said. (Reporting by Tamora Vidaillet and Laure Bretton; Editing by Andy Bruce)