French MPs poised to approve €20bn inflation relief package

France vs. Inflation--Pension Hikes, Rent Caps, Renationalize Hydro

Aug. 4, 2022

Cost of living measures include pension rises, a cap on rent increases and a civil service pay rise

French lawmakers are to definitively adopt a range of new measures to help struggling households cope with rising energy and food prices, as well as an updated budget that will pay for France to renationalise the electricity company EDF.

The final vote on Thursday is a formality and follows weeks of heated debate and negotiations at the national assembly, where the French president, Emmanuel Macron, no longer has an absolute majority.

The package features €20bn in inflation relief – including pension rises and a cap on rent increases – and had been promised by Macron as growing inflation erodes wages.

Macron’s centrist grouping suffered big losses in legislative elections in June, winning the most seats in the national assembly but falling about 40 seats short of the absolute majority needed to pass laws.

Marine Le Pen’s far-right National Rally, meanwhile, greatly increased its seats to become the biggest single opposition party. The hard-left Jean-Luc Mélenchon’s France Unbowed party also increased its seats and is now the biggest leftwing party in a broad coalition known as the Nupes, which includes the Socialists and Greens.

The cost of living measures were the first test of Macron’s ability to strike cross-party compromises in the face of a strong opposition and often with angry debates that ran into the evening and weekends.

The measures will increase pensions and some welfare payments by 4% and set a cap on rent increases at 3.5%. Amid criticism of long-stagnant wages in the public sector, civil servants will receive a 3.5% pay rise. The state-funded fuel price rebate worth 18 cents a litre will be increased to 30 cents in September and October. Private companies will be encouraged to offer employees an annual tax-free bonus of up to €6,000, raised from a previous limit of €1,000.

France is to renationalise EDF, one of the world’s biggest energy providers, in response to the energy crisis aggravated by Russia’s invasion of Ukraine. “We must have full control over our electricity production and performance,” the prime minister, Élisabeth Borne, had told parliament. Macron also promised to scrap the TV licence fee.

The legislation has been backed by members of Macron’s centrist alliance, the rightwing party Les Républicains and the far-right National Rally. The leftwing Nupes coalition criticised the measures as not going far enough and widely voted against the bill in the first vote on Wednesday.

After the definitive vote on Thursday, the parliamentary session will end this week for both houses of parliament, the national assembly and the Senate. French lawmakers often resume debating legislation in September, in a special session. But this year the parliament will sit again in October, to allow time for the government to prepare legislation it expects to be harder to pass, including on immigration, which will be the focus of a parliament debate in the autumn.

[Top photo: The vote follows weeks of heated debate and negotiations at the national assembly. Photograph: Christophe Petit-Tesson/EPA]