The French president pays his citizens an inflation adjustment.
(Photo: dpa)
Paris In France, too, people are increasingly feeling the rising prices, especially on their energy bills and at the petrol pump. Inflation comes at a very inopportune time for Head of State Emmanuel Macron; in six months there will be presidential elections in France. He tries to nip displeasure in the bud with special state payments to citizens.
On Thursday evening, Macron sent his Prime Minister Jean Castex on the most influential news program in the country, once again. At the end of September, Castex had already announced a tariff cap for gas and electricity at the same point on the TF1 station. Now he promised the French “inflation compensation” on the evening news.
All employees with a net salary of less than 2000 euros per month should receive support of 100 euros. Civil servants and pensioners below this income limit will also receive a check. A total of 38 million French people can look forward to the one-off payment, the total cost is 3.8 billion euros.
“We are facing an exceptional situation so we need an exceptional response,” said Castex. The inflation worries seem to replace the much discussed issues of security and immigration as the most pressing problem for the French in the past few months. According to a survey carried out this week on behalf of the broadcaster BFMTV, 45 percent of those surveyed named purchasing power as the most important issue with a view to the presidential election in spring 2022.
Top jobs of the day
Find the best jobs now and
be notified by email.
Worry about new yellow vests movement
A decisive experience in Macron’s tenure was the yellow vest movement against rising gasoline and diesel prices. Citizens in bright safety vests took to the streets in autumn 2018 to demonstrate against higher taxes on fuel. The protests then intensified over the winter. In the end, it seemed less about fuel prices and more about general social discontent.
One would definitely like to avoid a repetition in the Élysée Palace before the next presidential election. This is probably why Macron is now intervening. However: four years ago climate policy tax plans caused displeasure, the market-driven price increases of the past weeks and months can only influence his government to a limited extent.
Castex made it clear on Thursday evening that the compensation is by no means just about fuel costs. “The issue of inflation is not just about oil products, we need to have a broader approach than just fuel,” he said. So not only car owners but all households below the income limit get the special payment.
Capping of energy prices
Macron’s government had previously promised that almost six million households with low incomes would receive an “energy check” of 100 euros from the state in order to cushion the burden of the increased costs for gas and electricity. In addition, the announcement applies that gas prices will initially be frozen at the October level and electricity tariffs may rise by a maximum of four percent.
The French government hopes that inflation in general and the rise in energy costs in particular will be a temporary phenomenon. Even if the bet works: In the long term, the burden on French public finances will remain.
Due to the consequences of the pandemic, debt has already risen to around 115 percent of gross domestic product (GDP). This year Paris expects a budget deficit of more than eight percent, next year of almost five percent of GDP.
More: Price caps, energy checks, tax rebates – EU countries are planning to intervene in energy markets