Food voucher, fuel bonus, tariff shield to contain the rise in energy prices, indexation of pensions on inflation, Macron bonus. The new government announces an arsenal…

France: measures for purchasing power, but what budgetary equation?

Purchasing power is one of the Borne government's first measures.

Here, in a supermarket in Nantes, western France, on March 30, 2020. REUTERS / Stephane Mahe

Text by: RFI Follow

3 mins

Food voucher, fuel bonus, tariff shield to contain the rise in energy prices, indexation of pensions on inflation, Macron bonus.

The new government announces an arsenal of measures to support the purchasing power of the French.

But the budgetary equation promises to be difficult for the new government of Elisabeth Borne.

Renewed at the head of an expanded Ministry of Economy and Finance, which now also includes industrial and digital sovereignty, Bruno Le Maire's first task will be to respond to the difficulties of the French regarding the deterioration of their

purchasing power.

Forecasts from INSEE, the National Institute of Statistics and Economic Studies, announce a 5.4% increase in consumer prices for the month of May over one year.

After reaching 4.8% in April, this is the strongest increase since 1985. The Prime Minister, Elisabeth Borne, declared that the first bill examined by the next national assembly resulting from the legislative elections in June will be devoted to the support for the purchasing power of the French.

►Also read: Pension reform, a thorny issue for the government of Elisabeth Borne

These new expenditures are in addition to the 26 billion euros of measures already committed for 2022. With a public debt of nearly 113% of GDP, a deficit of 6.5% of GDP and growth at half mast, this new train of measures will again deteriorate public finances.

For economist Henri Sterdyniak, protecting against inflation while controlling public spending is not feasible.

“

France is facing a sharp rise in the price of energy, it costs us roughly forty billion.
The government has already taken very costly measures to limit these increases, which means that France has less inflation than other European countries.
The question is who pays these 40 billion?
The State, of course, cannot take care of everything given its deficit.
The most likely is that growth will be practically nil in the next three quarters for the French economy

, ”he believes, at the microphone of

Patricia Lecompte

, from the RFI Economy service.

“Growth will be practically zero”

Establish a food voucher, for a maximum amount of 60 euros, for which 8 million people would be concerned.

Extending the discount of 18 cents on a liter of fuel, renewing the tariff shield which makes it possible to guarantee gas and electricity prices until the end of the year, indexing pensions for retirees to inflation, or still conditioning the active solidarity income (RSA) to about twenty hours of training per month by the beneficiary in order to promote the return to employment... There are many measures, but how to finance them?

It remains up to Gabriel Attal, the new Minister of Public Accounts, to find the funding for this bill, a visibly difficult challenge given the state of public finances.

“

The most likely is that growth will be virtually zero in the next three quarters for the French economy.
The rebound after Covid-19 is behind us and now we are on a plateau where the rebound factors are offset by the loss of purchasing power which represents the rise in energy prices.
There is therefore no miracle that will happen, a rebound in growth.
The equation is of course not feasible, the government is at an impasse

France: measures for purchasing power, but what budgetary equation?

France: measures for purchasing power, but what budgetary equation?

“Growth will be practically zero”

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