SHARE
COPY LINK
For members

MONEY

Revealed: What will you receive from France’s €65bn cost-of-living aid package?

The French parliament has finally passed a massive €65 billion package of measures aimed at helping French residents with the spiralling cost of living. Here's a rundown of the help on offer, who it's available to and when it comes into effect.

After three weeks of sometimes heated debate, France’s parliament has adopted its multi-part purchasing power package to help mitigate rising cost of living and inflation.

In total, parliament approved a budget of nearly €65 billion for the whole package. 

It includes a raft of measures including price shields, tax rebates and grants. Here’s what is included and who will benefit.

Electricity and gas The government has voted to extend the tariff shield on gas and electricity prices until the end of the year: this means that gas prices will continue to remain frozen and that price hikes for electricity prices will be capped at four percent. 

For who: This applies to everyone who has a gas or electricity account in France.

When: The price freeze is already in effect and will continue until at least December 31st.

Fuel subsidy – The government’s fuel rebate (on petrol/gasoline and diesel) will be increased from €0.18 per litre to €0.30 in September and October, and then in November and December it will fall to €0.10. 

For who: All drivers (including tourists) – this is applied automatically at all fuel stations in France

When: The €0.18 per litre rebate is already in place and remains until August 31st, and rises to €0.30 on September 1st.

Pensions – The index point for pensions will be raised by four percent.

Who: This covers anyone who receives a French pension – roughly 14 million people – it does not affect anyone who gets a pension from another country.

When: From September 9th. 

Abolishing the TV licence fee – The annual TV licence raised €3.7 billion a year for public broadcasting, with the majority having gone toward France Télévisions, but has now been scrapped. It was €138 per household. 

For who: Any household with a television. This equates to about 23 million households in France who will no longer have to pay this yearly tax.

When: The was due to be levied on November 15th, but this year no bills will be sent out.

Tripling the Macron bonus – The maximum annual bonus – which is exempt from income and social security taxes – will be tripled.

It is a one time, tax-free payout that can be given to workers by their employers – if they chose to. Companies will now be able to pay up to €3,000 to their employees (and up to €6,000 for those with a profit-sharing scheme).

Who: This pertains to salariés (employees) whose businesses choose to offer this bonus.

When: The bonus can be paid between August 1st and December 31st.

Rent cap – Rent increases will be limited to 3.5 percent per year for existing tenants. Some cities already have in place their own rent control schemes, but the 3.5 percent cap is nationwide.

Who – This affects anyone who already has a tenancy agreement for a property in France (and also affects all landlords who are banned from making big rent hikes).

When – The 3.5 percent cap concerns annual rent increases that fall between July 2022 and June 2023.

Housing allowance – Those who benefit from personalised assistance for housing (APL) will see that increased by 3.5 percent.

Who: This pertains to those who qualify for governmental financial assistance with rent. Typically, this means low-income households. If you are already on APL – around 3.5 million people – the increase will be automatic, if you think you might qualify, apply through your local CAF.

When: The increase comes in your next payment, with the increased rate backdated to July 1st 2022.

Social benefits – The RSA top-up benefit will be increased by four percent (local authorities, who deal with RSA, will receive €600 million to help them finance and allocate this increase). Additionally, those who benefit from the ‘prime d’activité‘ (activity bonus) will see that value raised by four percent as well.

Who: Unemployed people below the age of 25 can qualify for RSA – this pertains to about 1.9 million people in France. The activity bonus is available to low-income workers – about 4.3 million people.

When: Catch-up payments will be in place from August 18th to September 5th. On September 5th, the updated payment will begin to be paid out.

Student grants – An increase of 4 percent for student grants (bourses) for higher education

Who: Students under the age of 28 who qualify for financial assistance in the form of grants. These students must qualify as ‘financially precarious’ for the school year of 2022-2023.

When: September 2022

Back-to-school grants – Families who meet certain income requirements are eligible for an allowance to help cover back-to-school costs – that grant will increase by four percent this year. There will also be an extra €100 subsidy for eligible families (with an additional €50 per child) paid “to those who need it most” according to Finance Minister Bruno Le Maire in an interview with RTL. 

Who: Low-income families with children. You can test your family’s eligibility on the website www.service-public.fr. This aid will impact 10.8 million households.

When: The one time payment will be paid at the start of the school-year in September.

The option to convert overtime days into extra cash – This is encompassed in two measures: increasing the ceiling of tax exempt overtime hours to €7,500 and opening the possibility for companies to buy back RTT days from their employees.

Eligible employees covered by the 35-hour week agreement accrue time in lieu if they work overtime, known as RTT days. Currently this time is taken as extra vacation days, but now employees will have the option to forgo the time off and instead be paid extra.

Who: For the buying back of RTT days, this applies to employees (salariés) who have an RTT agreement with their company.

For the increased cap on non-taxed overtime work, this applies to a range of employees, such as those who have 35-hour per week contracts and have their employer request that they work overtime or those who work beyond their part-time contract amount. You can learn more about whether you have the ability to declare overtime hours HERE

When: The RTT days buyout will run from between January 1st, 2022 to December 31st, 2025. For employees eligible for tax-free overtime compensation, the ceiling of €7,500 will only be in place for the year 2022.

READ MORE: EXPLAINED: Why is France’s 35-hour week such a sacred cow?

Pay rise for public sector workers – public sector pay will get a four percent rise in the index.

Who: Anyone employed in France as a fonctionnaire (eg civil servants, teachers, librarians).

When: This will be retroactive to July 1st

Assistance for some self-employed workers – A reduction in health and maternity insurance contributions will be introduced for low-earning self-employed workers. “Microentrepreneurs” will also benefit from a reduction in their flat-rate contributions.

Who: Self-employed workers whose monthly income does not exceed 1.6 times the minimum wage and who are registered as ‘microentrepeneurs’

When: TBC

The biometric carte vitale –  The Senate introduced this into the purchasing power package, but it is not a benefit. It will involve the implementation of a biometric carte vitale health card to “fight against social fraud” by adding an electronic chip with biometric data on it to health insurance cards. You can read more HERE.

Who: Everyone who is registered in the French health system and has a carte vitale (about 60 million people)

When: Lawmakers will begin plans to implement the plans in Autumn 2022, but it’s not clearly exactly what form the rollout will take.

How much will these measures impact inflation?

Some measures will likely be more effective than others. For instance, the extension of the tariff shield and increase of the fuel rebate in the early fall is largely to thank for France’s inflation level being two points lower than the European average, according to INSEE.

On the other hand, the tripling of the ceiling for the (optional) Macron bonus will likely not make a large difference. This is because it will likely not be widely taken advantage of, as last year only 4 million French people received the optional bonus, with the approximate average of the bonus having been only €500.

The pension changes will impact about 14.8 million people in France. However, according to economist Christopher Dembik, the revalorsation values are based on actual inflation and not on inflation expectations. “These revaluation measures will be too weak by the time they will be implemented,” Dembik said to French daily Le Parisien.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

MONEY

Cutting back and applying for benefits: How the weak pound has impacted Brits living in France

In recent weeks, the pound has become weaker when compared to other currencies, namely the euro. This has made life more complicated for Brits living in France. The Local asked readers to share their experiences - and advice - for others who find themselves in the same situation.

Cutting back and applying for benefits: How the weak pound has impacted Brits living in France

While the pound is still low when compared to other currencies, it has recovered somewhat since its drop after the British Chancellor’s mini-budget.

As of October 5th, the exchange rate was £1 to €1.14. For British people living in France who receive income in pounds sterling – whether they be pensioners or others with financial interests still in the UK – the drop in the pound’s value has had negative impacts.

The Local reached out to readers to hear how they have been affected by the exchange rate. Many offered their tips for navigating the current economic landscape.

Many readers found life still affordable, but expected to be more severely impacted in the future. Retiree A. Wood, who lives in Haute Vienne, said that “The recent drop in the value of the pound will not immediately affect me. If it remains low for more than a year then maybe I will have to do some calculating.”

Pensioners especially said that life in France had become “more expensive” and “costlier” for them, but being aware of price rises and managing the changes “with care” were plausible solutions for the time-being.

In general residents of France are better protected from inflation than many other European nations, thanks to government initiatives such as energy price caps and fuel rebates, but prices for many everyday items such as food have been rising steadily.

One respondent, Nigel Harrison, a retired former business consultant, said that weak pound has “not made life unaffordable, but worrying.” 

Meanwhile, some readers, all of whom are also retired, said that they were starting to feel more serious impacts of the exchange rate.

Retired librarian and micro entrepreneur, Pat Hallam, who has been living in Paris for the last two years, said that she receives her career pension in pounds, which she later transfers into euros by way of her French bank account.

She explained that she already works to supplement the cost of life in Paris, but now she expects to have to take on extra work.

She expects to also “cut back on things like socialising, eating out and culture.”

“Explaining this to friends will be hard, and it is what makes living in Paris a pleasure. I know the cost of living would be cheaper in other parts of France, but I’ve spent the last 2 years building a life in Paris, my dream destination. I would be very disappointed if events across the Channel forced me to move away, or even back to the UK,” she said.

READ MORE: The best banks for non-EU citizens living in France

Pat is not alone – Tom Baker, who is retired and lives in south-west France – said, “All my pensions are from the UK and the drop in exchange is definitely felt, coupled with the loss on transferring the money to France as I have five pensions.”

Baker explained that having his income drop has been particularly difficult “as a 74 year old with two young sons aged seven and 10” and amid “the present financial climate the cost of everything is spiralling.” 

Many readers said they would try to live on savings while waiting for the value of the pound to rise again, which has also posed its own problems, as many British bank accounts have begun closing the accounts of non-UK residents. 

John Stanley Mumford found himself in this situation, he said: “I have a pension in pounds. I will live on savings until the value of pound goes up! But, Barclays bank is to close my account as I am a French resident, so basically I’m stuffed!”

READ MORE: Banking giant Barclays to close all accounts of Brits living in France

Non-pensioners have also felt the impacts of a weak pound. One respondent discussed the dilemma of attempting to sell their UK home, and worrying about whether they should leave the money in pounds or transfer it to Euros afterwards. Others worried about their UK savings accounts.

Respondents did offer helpful advice for others in similar positions – ranging from tips to try to hold out for a better exchange rate to recommendations for how to become thriftier – like getting rid of unused streaming services and cutting back generally. 

Tom Baker said he recommends transferring funds “perhaps every three months to reduce the cost of transfer fees, which since Brexit have really increased.”

He also said that he checks the daily rate “for a week or 10 days before the transfer is needed to try and get a better each rate.” Others said if possible – wait until the pound recovers.

However, for those unable to hold out until the pound is stronger, several readers recommended apps and international banking services, such as Wise and Revolut as handy ways to find better exchange rates and avoid high fees when transferring between a UK bank and a French one. 

Finally, Pat Hallam counselled Brits living in France to consider applying for welfare benefits if necessary. She said even if you’ve never considered it, “either out of pride or because you didn’t think you were eligible, maybe now’s the time to look again.”

She also recommended tracking energy use more carefully via a smart metre: it “takes three months’ use before you can start comparing consumption but it helps keep track of your energy use.”

READ MORE: Living in France: How to cut your household energy use by 10% this winter

Many thanks to everyone who took part in our survey and shared their experiences and tips.

SHOW COMMENTS