Facing tough vote, France’s Macron dangles anti-inflation sweeteners -Breaking
© Reuters. As a woman shop at Nice’s local market on June 7, 2022, price tags can be seen. REUTERS/Eric Gaillard
By Leigh Thomas
PARIS (Reuters – French President Emmanuel Macron has a plan to offer voters a package of inflation-busting sweeteners in order to win a majority at the November legislative elections. This month’s election is being fought for households’ shrinking purchasing power.
Macron finds himself in the middle of a Left-wing alliance that is led by Jean-Luc Melenchon, despite rampant inflation pushing up living costs and eroding wage incomes.
The two-round vote of June 12th and 19 will determine whether the centrist Macron can govern freely and without the help of allies.
President Obama’s response has been to promise new aid, increased pensions, and tax cuts for hard-pressed families. The government has made protection a key buzzword before the elections.
Macron told southern France’s voters on Thursday that he called on them to protect their savings and purchasing power as well as preserve the country’s future.
The July pension increase will be extraordinary at 4%, on top of the 1.1% rise in 2022. Plans are in place for food vouchers to the most vulnerable, as well as promises of increasing long-stagnant public sector wages. However, the government is yet to say how much.
Through August, an 18-cent fuel price discount will continue to be available.
Bruno Le Maire, Finance Minister, said that as inflation support bills grew quickly the rebate would soon be replaced with a measure aimed at those who depend on cars for their commute to work.
Economists claim that the latest measures are an addition to current aid measures for helping households deal with high inflation.
Already, 25 billion Euros – 1.2% Of GDP – have been mobilized by the government to increase purchasing power. It did this mainly through expensive caps on gasoline and electricity prices.
The package helped to keep the inflation in France below all other countries of the Euro zone except Malta. However, it reached an all-time high of 5.8% on May.
According to OFCE’s economic think tank, these latest measures to curb rising prices could be equivalent of 0.4% percent more GDP. The total cost would then rise to approximately 40 billion euro.
Yet, economists seem to be largely unaffected by the rising strain on the public financial system, even though it is expected that the deficit will exceed 5% of the economy’s output, as the government had hoped.
“Is it wrong to not reduce structural deficit too rapidly? Xavier Ragot of OFCE said that he thinks measures to promote growth and employment are the correct solution to this crisis.
($1 = 0.9409 euros)