Wed, Dec 12, 2018 - Page 6 News List

France spending push puts EU limit at risk

Bloomberg

A man dressed as Santa Claus takes coffee at a “yellow vests” protest blocking an oil depot near Le Mans, northwestern France, on Tuesday.

Photo: AFP

French government ministers yesterday defended a raft of new spending measures and tax cuts announced by French President Emmanuel Macron, signaling that containing the monthlong “yellow vests” crisis would take priority over EU budget rules.

“Do you think we can act at the European level as if nothing’s happened?” French Minister of Ecology Francois de Rugy said on Radio Classique, citing the Brexit vote in Britain and the rise of far-right parties in Germany. “We aren’t saying that long term the debt isn’t a problem, but the first priority is not to discuss this with Brussels, but with the French people.”

In a televised speech on Monday night, Macron urged companies to pay their workers a year-end bonus that would not be taxed, ended levies on overtime, indicated the government would fund a 100 euro (US$114) a month increase in the minimum wage and abolished a controversial tax on pensions below 2,000 euros a month.

The first indications from activists were that the protests would continue despite Macron’s efforts, which threaten to push the government deficit over the EU limit next year.

French Prime Minister Edouard Philippe was to provide details of the total costs to parliament yesterday.

The French budget deficit was already projected to reach 2.8 percent next year, even before the government last week retreated on a planned fuel-tax hike and the unrest dented growth.

The additional measures could push the shortfall to as much as 3.5 percent, well over the 3 percent limit imposed on countries in the eurozone, Les Echos reported, citing unnamed government officials.

Richard Ferrand, president of the National Assembly and former head of Macron’s political party, said the measures would temporarily widen the deficit.

“A stable France is in Europe’s interest,” he said yesterday on RTL Radio.

Government spokesman Benjamim Griveaux said on BFM that the measures announced by Macron would cost between 8 billion and 10 billion euros.

The government would offset some of the extra costs because some of the tax cuts would make the public administration more efficient, he added.

At the same time, Macron refused to reverse path in other areas, saying his decision last year to abolish the wealth tax — a major gripe of protesters — was necessary to bring investment and jobs to France.

He also promised a national debate on other issues, such of France’s voting systems and immigration.

In a quick poll carried out by OpinionWay for LCI television, 50 percent said they were not convinced by the president and 49 percent were.

The protests should stop for 54 percent of respondents, while 45 percent said they should continue.

The poll questioned 991 people right at the end of the speech.

“Yellow vest” protesters were not impressed.

“He’s throwing sand in our eyes, I don’t think that will overwhelm the French,” Christophe Chalencon, an organizer from the south of France, said on LCI television.

Jeremy Clement, another “yellow vests” leader, said the announcements were “positive, it’s a big step forward,” but they still do not tackle needed deeper reforms.

Protesters barring roads near Strasbourg, Toulouse, Lyon and Orleans told reporters for French media that they would maintain their blockades.

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