France: Lawmakers Agree €20 Billion Bill To Plug Inflation

By  Davide Basso

French lawmakers in the lower house adopted a government-tabled emergency bill earmarking €20 billion to tackle inflation and the resulting social risks in the early hours of Friday (22 July). The bill still requires the Senate’s approval to become law.

After four days of debates, lawmakers agreed that €20 billion should be dished out to tackle inflation as they found a compromise on the ‘purchasing power’ bill proposed by the government of Prime Minister Elisabeth Borne.

While inflation in France is still among the lowest in the EU, the government, fearing social unrest due to rising inflation, still tabled the emergency measure.

Main measures

On energy, lawmakers approved a gas price freeze, a 4% price cap on electricity bills, and an extension of the measure that gives consumers a 15-18 cent discount per litre of fuel.

Going against the government, lawmakers also agreed to raise the fixed price at which EDF, the state-owned electricity utility, is obliged to sell part of its electricity to its competitors by law. The fixed price is expected to reach “at least” €49.50 per megawatt-hour (MWh) in 2023, up from €42 in 2012.

Lawmakers, excluding left-wing and Green MPs, voted in favour of a temporary exemption from the environmental law to temporarily install a floating methane terminal near the port of Le Havre.

MPs also greenlighted the government’s plans to relaunch a coal-fired power station in Saint-Avold, although most deputies said they are not particularly happy about the turn of events.

Lawmakers also voted on the proposed 4% pension increase, as well as the 3.5% increase for civil servants’ salaries and some social benefits – though these are still below inflation.

Surprisingly, lawmakers were also unanimous on no longer taking into account the partner’s income when calculating the allowance for disabled adults from October 2023 – a practice associations said did not give the disabled full independence. Macron’s majority lawmakers also backed the change despite their opposition under his previous mandate.

On housing, lawmakers also voted in favour of capping rents at a maximum of +3.5% in mainland France and +2.5% in the overseas territories between July 2022 and June 2023. Housing allowances will also get a 3.5% boost. Against the government’s advice, the opposition limited the increase in rents to + 1.5% in the so-called “rural revitalisation” areas.

On top of that, eight million households will receive an exceptional €100 allowance at the start of the school year.

Students who receive grants will also continue to benefit from the €1 meal scheme and have their grants increased by 4%. In France, more than a third of students receive a grant based on social criteria.

Consumers more generally were not left out of the mix, as lawmakers approved a series of consumer protection measures, in particular, to facilitate the termination of online contracts and insurance policies.

The Left against the bill

But not everyone was so enthusiastic about the bill. Th,e left-wing alliance known as NUPES did not back the bill as a whole but voted in favour of some measures such as capping rent increases.

NUPES not only slammed the bill for failing to protect purchasing power and favouring some fossil fuel sources but also criticised the government for favouring an increase in bonuses but opposing a bill proposing to increase the monthly minimum wage to €1,500 – a bill Marine Le Pen’s far-right Rassemblement also opposed.

Macron’s Renaissance deputies argued that the ceiling for tax-free bonuses – known as “Macron bonuses” – has tripled from €1,000 to €3,000 per year, even reaching €6,000 in some cases.

In recent years, five million employees earning less than three times the minimum wage have received bonuses averaging €500 per year.

Since the bonuses are tax-free, employees receive the full amount but the amount does not go into pension, health or unemployment contributions.

Voting in detail

In the absence of an absolute majority, Macron’s coalition in parliament only managed to pass their text due to backing from the right-wing Les Républicains party and far-right Rassemblement National. The LIOT group of independents and regionalists also helped the government pass its bill.

NUPES opposed the bill without showing a unitary stance. Though about 20 lawmakers, mainly from the Socialists and Communist Party abstained, the rest – including the entire La France Insoumise and the Greens – voted against.

The bill must now be adopted by the Senate which will start looking into it next week. If the Senate modifies the bill, it will be up to a joint house committee to reach a compromise.

**Paul Messad contributed to reporting