With just six months before the election, Prime Minister Jean Castex said on Thursday that around 38 million people earning less than 2,000 euros ($ 2,330) per month would receive 100 euros in “inflation compensation” to protect themselves against the soaring fuel costs. This came after the government previously announced it would freeze gas tariffs and reduce electricity taxes, and Macron unveiled his “France 2030” industrial stimulus plan.
A total of 10.2 billion euros of additional spending in 2022 will inflate the deficit to 5% of economic production against 4.8% initially budgeted, while the debt will be close to 114%, said Finance Minister Bruno The Mayor to journalists during a telephone press briefing.
“This is the strategy of the 2022 budget: invest and protect,” Le Maire said on Friday. “Both are of equal importance. ”
The strength of the economic recovery and the surge in inflation caught European governments off guard. At this point, Le Maire said he expected to face high unemployment and cascading bankruptcies, rather than having to repeatedly change policy to cope with a dynamic recovery.
“We are in a period of transition and it is always a delicate moment in the history of a country,” said Le Maire. “There are necessary adjustments between supply and demand and pressures on commodities. ”
- The inflation compensation will cost 3.82 billion euros spread over this year and next year
- Electricity price caps and gas price compensation add € 5.9 billion and € 1.2 billion respectively to the 2022 budget
- 2.8 billion euros will be added to plans for next year as part of the France 2030 long-term investment program
- The 2022 budget will also include an additional 1.2 billion euros for training measures that Macron will detail in the coming weeks.
Still, Le Maire said there were positive surprises for 2021’s finances, as faster job creation and stronger growth will bring € 4.7 billion in additional revenue to the government. The 2021 budget deficit will be 8.1% of economic output, instead of 8.4% previously forecast, Le Maire said.
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