France: Government red line harmed by “yellow high vis vests”

While the yellow vest protests were spreading at the beginning of th is week , with a growing number of secondary schools and a few universities on strike or blocked, President Macron announced Monday night during a 10-minute televised speech four new measures to address the concerns of the protesters. The measures generally aim at improving household purchasing power . More specifically, there will be an increase of the monthly income of employees earning the minimum wage by €100 in 2019, the abolition of social contributions and taxes on overtime in 2019, a cancellation in 2019 of the 1.7 percentage point increase in the general social contribution (CSG) for pensioners with a monthly income of less than €2,000, and the possibility for companies to pay a year-end premium exempted from social contributions and taxes. This Special Report looks at the cost of the announced measures, which together with the previous measures is likely to exceed €10bn (0.5% of GDP), their specific features with regard to the reform strategy implemented by the government so far and how they will be financed, keeping in mind, that whatever the solution will be, it will avoid a confrontation with Brussels. Another call for demonstrations has been launched by the yellow vests for Saturday 15 December, and it has not been withdrawn after the announcements of the President. The yellow vest conflict is entering now its second month.