France offers low-income households an inflation premium of 100 euros

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By Geert De Clercq and Richard Lough

PARIS (Reuters) – French Prime Minister Jean Castex on Thursday announced that low-income households will receive € 100 from the government to help ease the impact of rising energy prices, especially those at the gas pump .

Castex called the payment an “inflation payment” which would be paid to citizens earning less than 2,000 euros net per month. This would cost the Treasury 3.8 billion euros (4.42 billion dollars).

President Emmanuel Macron, six months away from a presidential election, is seeking to limit the damage caused to his economic record by soaring energy prices.

“We believe this price increase is temporary,” Castex said in a TF1 television interview, “but we cannot let it hinder the recovery.”

The government had already rushed in recent weeks to cap gas and electricity prices and help the poor pay their heating bills in winter as energy prices rose around the world during post-pandemic economic recovery.

At the end of September, Castex said that after an increase in October, domestic gas prices would likely stay at the same level until spring. However, on Thursday, he said the decline in global prices would be slower than expected and the cap would remain in place until the end of 2022.

As gasoline prices have risen steadily in recent weeks, the government has faced increasing pressure to reduce taxes paid at the pump, which can represent up to 60% of what drivers pay.

Finance Minister Bruno Le Maire argued that the move would be costly for public finances and would also amount to a subsidy on fossil fuels at a time when the government was trying to wean them off.

Taxes on energy and gasoline can be a sensitive issue in France. They have sparked waves of weekly demonstrations by protesters known as “Yellow Vests” because of the high visibility yellow vests they wear.

Castex said the 100 euros payout will be automatic and will come on the payslips of private sector workers in December, while civil servants and retirees will receive it in January or a little later.

He added that the 2,000 euro threshold would be calculated per person, not per household, and that the government would stick to its 2022 budget deficit target of 5% of GDP by offsetting the payment with new income and budget savings.

(Reporting by Geert de Clercq and Richard Lough; Editing by David Gregorio)


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