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ECONOMY

French PM skips MPs’ vote to save key reforms

Fearing defeat in parliament on a raft of key economic reforms, the French PM Manuel Valls took drastic action on Tuesday and pushed through the bill without the normal vote by MPs. The move could spark a vote of confidence in the government.

French PM skips MPs' vote to save key reforms
French Prime Minister Manuel Valls speaks in the national assembly. Photo: AFP

"I won't take any risks," Manuel Valls told deputies, as the government struggled to win a parliamentary majority over the hotly contested reforms.

"This legislation is important, even essential, to relaunch growth, create employment, to overcome certain blockages in our economy," he said.

"I won't take a risk with a bill like this which I consider essential for our economy," Valls told deputies.

Deputies had been set to vote on the highly divisive package of measures, including the extension of Sunday shopping drawn up by the country's energetic and youthful banker-turned-economy minister Emmanuel Macron, who says he has received death threats over the reforms.

But with so many Socialist MPs in the majority opposing the bill, because they see it as too pro-business, Valls decided he couldn't take the risk of the government suffering an embarrassing defeat.

He decided to use the clause known as "49-3" which allows the government to pass a bill, without a parliamentary vote.

The bill is considered as having passed unless the parliament votes through a motion of no-confidence in the government — which analysts see as highly unlikely.

The right-wing opposition UMP party has already vowed to table a vote of no-confidence but political analysts say it is highly unlikely that the rebel Socialists will choose to bring down the government and risk their own seats over the reforms.

Initially the bill had been expected to pass despite the opposition, but as the day went on it became clear that the government may not have the support they need.

According to several MPs who spoke to AFP on Tuesday, Valls had feared the reforms will not get through a parliamentary vote, with numerous left wing rebels set to vote against it.

"I am not being dramatic. As I speak now, the bill will not pass. It would be a considerable blow," Valls reportedly told a group of MPs behind closed doors.

In rowdy scenes in parliament, the country's energetic and youthful banker-turned-economy minister Emmanuel Macron passionately defended his bill, which he sees as vital to energise the eurozone's second-largest economy.

A major plank of the reform package is to extend the number of Sundays that shops are allowed to open from a maximum of five per year to 12.

In certain areas classed as "international tourist zones" — such as in Paris the Champs Elysees, the Saint-Germain area and the Boulevard Haussmann where most of the capital's department stores are based — shops would be able to open every Sunday.

Shops in these zones, set also to be created in the French Riviera cities of Cannes and Nice, will also be able to stay open until midnight seven days a week.

Employees working between 9:00 pm and midnight will receive double pay and their trip home, and the employer will also cover any childcare costs.

With the reforms, Paris is bidding to cement its reputation as the world's number-one tourist destination.

"Do we want millions and millions of tourists — notably Chinese — who come to the capital to leave us and go and do their shopping in London on a Sunday?" asked Valls in a recent interview.

But the Socialist mayor of Paris, Anne Hidalgo, is staunchly opposed to extending Sunday opening and has described it as a "backward step for democracy."

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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