French lawmakers approve 'spending power' bill to help with soaring prices

France's divided parliament has passed a €20bn aid package to help low-income families deal with the cost of living crisis in the first major piece of legislation since elections last month deprived President Macron's allies of an absolute majority.

Volunteers with the French Red Cross charity hand out food packages to people in need in Ajaccio, Corsica in February 2022. Retirees with modest incomes are increasingly reliant on handouts. AFP - PASCAL POCHARD-CASABIANCA

The vote in the early hours of the morning provided a boost for President Emmanuel Macron's centrist government, which is 39 seats short of a majority and was desperate to show it could build consensus. 

The so-called "emergency purchasing power bill" passed with 341 MPs in favour, 116 against and 21 abstentions in a vote that took place shortly before 6:00 am.

The legislation proposes a range of measures designed to help consumers in the face of soaring inflation which last month reached 6.5 percent, in line with other euro zone countries.

It includes a four percent increase in pensions and welfare payments, a pay rise for public sector workers, food cheques and a mechanism for companies to make higher tax-free bonus payments to employees.

It will also temporarily cap rent hikes, extend fuel tax cuts and gives the government powers to tackle a looming energy crisis caused by the fallout of Russia's invasion of Ukraine.

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"Building majorities for projects to provide real solutions to the French people: we succeeded," Prime Minister Elisabeth Borne wrote on Twitter.

The late-night vote followed heated debates in which politicians of the left-wing Nupes alliance, the largest opposition bloc, criticised the government for measures they said did not go far enough.

The government was backed by the conservative Republicans (LR) and the far-right National Rally (RN), while Nupes did not vote for it.

The bill now goes to the Senate, the upper house dominated by the Republicains.

Divided assembly

One of the most controversial measures authorises the state to re-open a coal-fired power station in eastern France in the event of power shortages this winter. 

"The return of coal is not good news," admitted Maud Bregeon from Macron's LREM party, defending it as a "temporary" response to "an exceptional situation."  

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French politics has been cast into an unusual period of instability following parliamentary elections last month that saw recently re-elected Macron lose his majority. 

The government suffered its first defeat on July 12 when opposition parties voted down a proposal to give the government powers to demand travellers show proof of vaccination against Covid-19. 

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Although the cost-of-living bill passed with a wide majority, analysts say other pieces of planned legislation, such as pension reform, will be far more difficult to pass.

Another vote to authorise an emergency budget to fund the financial aid package will follow, with debates possibly this weekend. 

(with newswires)