Macron's Inflation-relief Bill Faces Narrow Path To Compromise In Parliament

President Emmanuel Macron's French government, hunting for votes to enact a cost-of-living relief bill after losing its majority in parliament, is open to amendments backed by conservative opponents that would incentivise work, a government source said.

The 20 billion euro "purchasing power bill" is the first big test of the government's ability to pass laws since losing control of the National Assembly in last month's election.

Getting the legislation, which includes a 4% pay hike for civil servants and a 3.5% increase in pension and welfare benefits, over the line without costly concessions to opposition parties will require some delicate political calculus.

To that end, it is prepared to encourage the introduction of measures championed by the conservative Les Republicains that would benefit workers, like a tax break on overtime pay or making it to easier to work while retired, the source said.

"Everything that goes in the direction of making work pay better is worth looking at. On this basis, we should be able to build a compromise, especially with Les Republicains," the government source, who spoke on condition of anonymity, added.

Macron's centrist 'Ensemble!' (Together!) alliance has 250 of the 577 seats in the lower house, meaning it must find at least another 39 votes to pass the bill.

The government does not expect the package's cost to the budget to weigh on the public deficit because of better than expected tax revenues so far this year.

Finance Minister Bruno Le Maire is opposed to amendments that would push the deficit past the 5% of GDP expected this year, putting in jeopardy plans to bring it back into line with a European Union limit of 3% by 2027.

The government source said that while there may be some wiggle room for extra spending, it was in the millions of euros and not billions.

OPPONENTS PLAY HARDBALL

However, opposition parties want to flex their new-found muscle by adding amendments that could cost the public finances billions.

The broad left-wing Nupes alliance has tabled 600 amendments worth 100 billion euros, according to Macron's party.

Lawmaker Eric Coquerel, whose hard-left La France Insoumise party (France Unbowed) is the dominant group inside Nupes, said the government would fail to pass its bill without making concessions.

"The time when they could pass a law at the snap of a finger is over," Coquerel, who heads the finance committee and has considerable power over which amendments get considered, told Reuters.

Les Republicains (LR), with its 61 lawmakers, is intent on demonstrating it can extract big concessions beyond making work pay. It has refused to back down on a demand that fuel pump prices - currently over 2 euros a litre for diesel - be capped at 1.50 euros through tax cuts, despite the huge cost to the public purse.

"If the government wants us to be part of the majority, then it's under our conditions," said the party's head in parliament, Olivier Marleix.

While other LR lawmakers indicate they could be more flexible, the government may need to find votes from independent lawmakers and perhaps also moderates within the Nupes bloc.

And while Macron's government is reluctant to count on the far-right Rassemblement National (National Rally), it may end up relying on at least some of their 89 lawmakers.

"Even if the measures don't go far enough and aren't perfect, if they bring support to millions of French people we will back them," RN lawmaker Julien Odoul told Reuters.

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