France to spend €45bn to shield households from energy price shocks

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France to spend €45bn to shield households from energy price shocks

The French government plans to spend €45 billion to shield households and businesses from energy price shocks in a budget focused on bringing down inflation.

The finance minister, Bruno Le Maire, said that the cost of gas and electricity would be capped at 15% from January. The bouclier tarifaire tariff shield outlining key elements of his 2023 budget bill, Le Maire said it was financed by the last euro and the government s No 1 priority was fighting inflation at a time of unprecedented uncertainty due to Russia's war against Ukraine.

The most urgent challenge for France and other European nations is to bring down inflation pressure, the minister told reporters on Monday. He said that we don't want to increase taxes and we want to protect households.

The country of the price cap was expected to be reduced by special levies on energy companies from €45 bn to €12 bn. Attal said that the budget we are presenting is a budget to protect.

Income tax bands were going to be increased by 5% next year in order to mitigate the effects of inflation, meaning someone earning €2,000 a month would be €200 better off, Attal said. The top tax bracket for anyone earning more than €169,000 will be at 45%.

Le Maire has also announced pay increases for teachers as well as 10,000 new civil service jobs, including 2,000 new teachers, and the financing of 6,000 homes for refugees and asylum seekers.

He said that inflation was expected to remain at 6% in the coming months, before dropping to 4% in 2023. The government's second priority was to keep public spending to within 5% of the country's output, with the aim of reducing it to the EU's limit of 3% of GDP by 2027 and to reduce public debt to a record €270 billion a year from 2026, Le Maire said.

Economic forecasts from earlier this month suggest that France's economy will drop to 1% next year from 2.7% this year. The high council for public finance, an independent body, said the government's growth forecasts are optimistic.

The budget has to be pushed through a fractious parliament after it lost its majority in the Assemble Nationale in the legislative elections before the summer.