France unveils measures to boost household purchasing power

The French government has unveiled a 20 billion-euro ($20.3 billion) package of measures meant to help struggling households cope with the consequences of the war in Ukraine, including rising energy and food prices

The French government unveiled Thursday a 20 billion-euro ($20.3-billion) package of measures meant to help struggling households cope with the consequences of the war in Ukraine, including rising energy and food prices.

The proposed legislation was presented at a Cabinet meeting Thursday, a day after French Prime Minister Elisabeth Borne detailed the government's economic strategy in parliament.

The measures will be debated at parliament later this month and are seen as a crucial test for the government’s ability to govern.

President Emmanuel Macron’s centrist alliance won the most seats at the National Assembly in elections last month, but lost its straight majority — while a leftist coalition and the far-right made big gains, becoming strong opposition forces. The government offered to make compromises on a case-by-case basis with other political forces to avoid legislative deadlock.

The government’s move comes as annual inflation reached a record 8.6% for the 19 countries using the euro, swollen by a huge increase in food and energy costs fueled partly by the war in Ukraine.

In France, annual inflation is estimated to 6,5%, among the lowest in the eurozone.

“The cause of the inflation is not to be looked for in a French structural economic problem, but in the Ukrainian conflict,” government spokesperson Olivier Veran said. “No way will we let the French worry about not being able to pay for their shopping like they used to do.”

The measures include increasing pensions, which will give people on the basic state pension an additional 62 euros ($63) per month, Veran said.

A series of welfare payments will also increase by 4%. Finance Minister Bruno Le Maire said family benefits will be included, which "is fair, because families with children are the most impacted by food price rises. When you have three or four mouths to feed, it’s necessarily expensive.”

Civil servants will see their salaries rise 3.5%.

“Today, what is penalizing the most the daily life of our fellow citizens? Housing, fuel and food. On these three items, we’re bringing three massive, efficient responses,” Le Maire said.

Rent increases will be capped this year at a maximum 3,5%.

Regarding fuel, a current rebate of 18 cents per liter will be replaced by a check from 100 to 200 euros ($101 to 203) for low and middle income workers who need to use their car, which represents about 12 million households.

In addition, 9 million poorer families will receive a check of 100 euros and an additional 50 euros per child to buy food, Le Maire said.

The government also plans to maintain a current cap on electricity prices and a gas price freeze until the end of the year.

Private companies which make profits are also encouraged to offer their employees an annual bonus of up to 6,000 euros ($6,092) that's tax-free for employees and tax-deductible for employers — in line with a campaign promise from Macron, who was reelected in April.