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French lawmakers back Macron's promised inflation relief

PARIS (Reuters) - French President Emmanuel Macron’s government honoured on Friday a re-election promise to boost household purchasing power amid soaring inflation as the National Assembly passed a bill lifting pensions and temporarily freezing rent hikes.

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With the vote in the lower house, Macron passed a first test of his ability to strike cross-party compromises after losing his absolute majority in June legislative elections.

“We’ve succeeded in reaching a majority on a case-by-case basis to provide French people with concrete solutions,” said Prime Minister Elisabeth Borne.

The package, expected to cost 20 billion euros ($20.4 billion), was a major plank of Macron’s campaign for re-election in April. His party lost its controlling majority in legislative elections as far-right and hard-left parties pushed more radical and costly solutions to the inflation crisis.

That means Macron’s government now has to negotiate case-by-case with opposition parties to push through legislation, setting the stage for bitter battles over its planned overhaul of the pension and unemployment insurance systems.

The draft law on inflation relief also includes a pay rise for public sector workers, food checks and a mechanism for companies to make higher tax-free bonus payments to employees.

FINANCING

Separately, debates for a supplementary 2022 budget bill financing the new measures were due to start on Friday afternoon that include state-financed car fuel discounts.

While opposition lawmakers from Les Republicains are pushing for bigger discounts for longer, the government has indicated it is open to compromise as long as the cost is kept at 4.4 billion euros.

With some lawmakers calling for a “supertax” on firms benefitting from the energy price crisis, French oil company TotalEnergies said it would cut fuel prices at its service stations across France.

Helping the French cope with a higher cost of living, mainly driven by soaring energy prices after Russia’s invasion of Ukraine, was one of Macron’s main promises after his first term was marked by violent protests and the yellow-vest movement.

The government has already spent around 25 billion euros in measures like caps on power and gas prices, helping to keep French inflation lower than most other euro zone countries. Last month, France saw inflation of 6.5% over 12 months.

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

Securing 341 votes for the bill, with 116 against, the government was backed by Les Republicains and the far-right Rassemblement National, while Nupes lawmakers did not vote for it.

The bill next goes to the Senate, the upper house dominated by the conservative Les Republicains, although the lower house can later veto changes made there.

($1=0.9820 euros)

Reporting by Elizabeth Pineau, additional reporting by Myriam Rivet and Leigh Thomas; Writing by Tassilo Hummel and Leigh Thomas; Editing by Clarence Fernandez, Christopher Cushing and Andrew Cawthorne

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