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Macron Aims to Win Over Yellow Vests With New Spending in France

Bloomberg logo Bloomberg 12/10/2018 Gregory Viscusi and Helene Fouquet
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(Bloomberg) -- President Emmanuel Macron admitted he’d lacked sensitivity to the concerns of regular people and promised a raft of new spending as he sought to draw a line under the monthlong Yellow Vests crisis roiling France.

In a statement aired Monday night on French television and radio networks, he urged companies to pay their workers a year-end bonus that won’t be taxed, ended levies on overtime, indicated the government would fund a 100-euro a month ($114) increase in the minimum wage, and abolished a controversial tax on pensions below 2000 euros a month.

“I feel in many ways that the anger of the yellow vests is justified,” he said in his first public comments for more than a week. France is facing “a state of social and economic emergency,” he added.

Macron’s plan to remake France as a more flexible, competitive and high-tech economy fit for the 21st century is at risk after the Yellow Vests tapped into a deep well of resentment for both his policy plans and his style. The first indications from activists were that the protests would continue despite his efforts.

‘Big Step’

“He’s throwing sand in our eyes, I don’t think that will overwhelm the French,” Christophe Chalencon, an organizer from the south of France, said on LCI television. Jeremy Clement, another Yellow Vests leader, said the announcements were “positive, it’s a big step forward,” but they still don’t tackle needed deeper reforms.

Protesters barring roads near Strasbourg, Toulouse and Orleans told reporters for French media that they’ll maintain their blockades.

Spokespeople for the far-right National Rally and far-left France Unbowed, the two parties that have tried most energetically to piggyback on the protests, also said the measures were inadequate, as did the head of one of France’s two largest unions.

“The president didn’t understand a thing about the anger out there in the streets,” said CGT labor union leader Philippe Martinez.

Emmanuel Macron wearing a suit and tie © Bloomberg Emmanuel Macron

Counting the Cost

Macron didn’t say how much the measures would cost in total, though the extra money for workers making minimum wage will reach 1.6 million people. That and the lack of a tax on overtime will be implemented in the beginning of the year, not necessarily on Jan. 1.

“This is going to cost a lot of money, we know that,” Cendra Motin, a lawmaker from his party, said on BFM TV. “But today that is no longer the question.”

The French budget deficit was already projected to reach 2.8 percent next year, close to the 3 percent limit imposed on countries in the euro zone. And that forecast came before the government retreated on a fuel-tax hike planned for next year and the unrest dented growth. The additional spending may put European officials in an awkward spot as the try to force Italy to deliver a deficit of less than 2 percent.

The 100-euro boost in the minimum wage represents a regrouping of all future increases that states had planned from January until October 2021, the Elysee Palace said after Macron’s speech.

Read more: French Riots Hand Italy New Ammunition in EU Budget Tussle

The Yellow Vests movement started off in early November with people wearing the security jackets they have to keep in their cars to protest the rising cost of fuel, caused partly by carbon taxes imposed by Macron. Then it moved onto social media and, as it gained momentum, supporters began Nov. 17 to block roads and fuel depots.

As the demonstrations gathered force, their demands also expanded, becoming a broader backlash against sliding living standards and Macron himself. The movement lacks any leadership and has refused to link up with any political party.

Read More: Misfiring Macron Desperate for a Victory as Magic Starts to Fade

Elected for a five-year mandate with a majority in Parliament and no mid-term elections, Macron’s job should be safe for now. But his ability to continue with the ambitious program of reforms he’s set out will depend on how the public reacts to Monday night’s statement.

Macron accepted that he might have appeared out of touch in the past.

“I could have made you think I didn’t share your concerns, that my priorities were elsewhere,” he said. “I might have said words that wounded.”

--With assistance from Geraldine Amiel and Angelina Rascouet.

To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net;Helene Fouquet in Paris at hfouquet1@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Ben Sills, Karl Maier

For more articles like this, please visit us at bloomberg.com

©2018 Bloomberg L.P.

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