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French PM to unveil first laws as part of Macron’s mission to transform France

French Prime Minister Edouard Philippe will unveil Tuesday the new government's first steps towards the "transformation" of the country promised by President Emmanuel Macron.

French PM to unveil first laws as part of Macron's mission to transform France
Photo: AFP

Macron and his new centrist party Republic on the Move (REM) swept to power in elections in May and June on promises to rejuvenate French politics, boost entrepreneurship and overhaul the social security system.

Philippe will set out the measures the government intends to put to parliament over the next 12 months, including controversial labour market reforms, tax cuts for businesses and a law to improve ethical standards in public life.

Macron, France's youngest president at just 39, gave a state of the union address to both houses of parliament on Monday, saying that he was not aiming for mere reforms but a “transformation” of the political system and the economy.

As well as reducing France's budget deficit to under 3.0 percent of GDP, he has promised an overhaul of unemployment benefits and pension systems and to reduce the number of civil servants by 120,000 over his five-year term.

READ ALSO:

France is ready for 'radically new path', says Macron as he vows to slash French lawmakers by a third

The government will face little difficulty in passing legislation in the lower house of parliament where REM candidates won more than 300 out of 577 seats in last month's election, only 14 months after the creation of the party.

The upper-house Senate, where rightwing Republicans hold a majority, will be trickier.

Macron faced mixed reviews for his inaugural address to lawmakers in the Palace of Versailles, a novelty which he intends to turn into an annual event to present his vision for the country.

The French press noted his determination to restore the prestige of the office of the all-powerful presidency and said he appeared keen to stay above the political fray.

“Macron is leaving the difficult work to Philippe,” wrote commentator Paul-Henri du Limbert in the right-leaning Le Figaro newspaper.

Many critics say Macron's unpopular Socialist predecessor as leader, his former mentor Francois Hollande, failed to project an image of presidential authority.

But Macron's style — he has used the former royal palace in Versailles twice since taking office and has given only one media interview — has also seen him criticised by some for being aloof, monarchical or even “pharaonic”.

On Tuesday, he was visiting a military base in the northwest of the country where he is expected to be taken on a trip aboard the nuclear submarine “The Terrible.”

Macron also promised in his speech on Monday to slash by a third the number of MPs in the lower and upper houses, telling lawmakers he would call a referendum if they do not agree to the measure.

The new head of state has broadly positive approval ratings with slightly more than half of respondents in recent polls expressing a positive view of him — around the same level as Hollande enjoyed at the start of his term.

ENERGY

EXPLAINED: Why are French energy prices capped?

As energy prices soar around Europe, France is the notable exception where most people have seen no significant rise in their gas or electricity bills - so what lies behind this policy? (Hint - it's not just that the French would riot if their bills exploded).

EXPLAINED: Why are French energy prices capped?

On most international comparisons of rising energy prices, France is the outlier – but the government control of energy prices is not in fact a new policy and was in place well before the Russian invasion of Ukraine sent gas and electricity prices soaring.

At present prices for domestic gas are frozen at 2021 levels and electricity prices can only increase four percent per year. According to economy minister Bruno Le Maire, without these measures French bills would have risen by 60 percent for gas and 45 percent for electricity.

Both these measures – collectively known as the bouclier tarifaire (tariff shield) – are in place until at least the end of 2022, and could be extended into 2023.

The extension of the price shield was confirmed by parliament earlier in August – part of a €65 billion package of measures aimed at tackling the cost-of-living crisis – but had been in place for much longer.

Tariff shield

The reason that gas prices are frozen at 2021 levels is that the freeze came into effect on November 1st 2021 – well before Russia’s February 2022 invasion of Ukraine.

The measure was initially put in place to help people deal with the economic after-effects of the pandemic, but was extended in the spring of 2022, when electricity prices were also capped at four percent.

Price regulation

But although prolonged price freezes are unusual, the French government involvement in price-setting is completely normal and during non-freeze periods, a rate is set each month.

If you read French media (or The Local), you’ll notice regular articles on ‘what changes next month’ which include gas and electricity prices, usually expressed as a month-on-month percentage rise or fall. This refers to the maximum rate that utility companies are allowed to increase their charges per month.

The government-set rate refers to the basic price plan from EDF. Some people are on special deals or time-limited tariffs, so if their deal or payment plan ends and they go back onto the basic rate, they can see a rise above the government rate.

Around 85 percent of households in France get their electricity from EDF. 

READ MORE: Reader Question: Why did my French electricity bill increase by more than 4%

State-owned utilities

So, why is the government involved? Well, it’s the majority stakeholder in EDF, the country’s largest electricity supplier, and owns Gaz de France (Engie). 

At present EDF isn’t completely state owned – although there are plans to fully nationalise it – but it owns 84 percent.

The French state owns a lot of service and utility companies including the country’s rail provider SNCF, postal service La Poste and France Télévisions. One notable exception is the country’s autoroutes, which are run by private companies, although the government sets limits on toll charges. 

Nuclear 

France is less exposed to energy shocks than some other European countries because of its nuclear sector.

It is unusual among European nations in the size of its nuclear industry – around 70 percent of electricity comes from its own domestic nuclear power plants, although during the heatwave several plants have had to lower output as rivers have become too hot to effectively cool the reactors. There are also ongoing technical issues that have seen some of the older plants shut down or forced to lower output.

READ ALSO Why is France so obsessed with nuclear?

France is usually a net exporter of electricity, but at peak times it has to import electricity, usually via the high-priced international spot market.

It does, however, import its gas, mostly via pipeline – in 2020 its biggest supplier was Norway, followed by Russia.

The French government has launched a sobriété energetique (energy sobriety) plan to cut its total energy consumption by 10 percent this year, which it hopes will allow it to get through the winter without Russian gas. 

Riots

Even before the recent €65 billion aid package, the French government was taking a pro-active role in helping people deal with rising prices – from the price shield to fuel rebates for drivers, €100 grants for low-income households and financial aid for industries such as agriculture and logistics so they could avoid passing prices on the consumers.

Cynics say this happened for two reasons – because there were elections in April and June and because the French would riot if their utility bills suddenly doubled.

There’s a kernel of truth in both – cost of living became a major issue in the April presidential elections and one that far-right leader Marine Le Pen very much made her own from early in the campaign, leaving Emmanuel Macron slightly on the back foot, although in truth his government had already introduced several measures to ease the burden on ordinary voters.

It’s also true that the French have a robust approach to holding their government to account, and high living costs have previously inspired noisy and sometime violent protests – the ‘yellow vest’ movement of 2018 and 19 began as a protest over living costs.

But it’s also true that the French State is generally quite involved in people’s everyday lives – as evidenced by those monthly gas and electricity price rates – and taking a laissez-faire approach such as that seen in the UK would be unusual for any French government, even outside of election season.

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