French government overrides parliament to ram though reforms

Hahaha.

French president François Hollande took drastic action on Tuesday to ram through a package of business-friendly economic reforms, overriding parliament to stamp out a rebellion within his own ruling Socialist party and avert a government crisis.

The move underlined Mr Hollande’s determination to implement reforms intended to kick-start France’s sclerotic economy and which have been demanded by his European partners as the price for delaying the reduction of the country’s budget deficit.

But the resort to a rarely used constitutional instrument to pass the law also signalled the weakness of his own government. It was unable to rally a majority in the National Assembly because of dissent by several dozen Socialist party leftwingers opposed to austerity and the deregulation package.

The lack of parliamentary support for flagship measures is likely to ring alarm bells in Berlin and Brussels as concerns grow that the political tide in the eurozone, led by Greece, is turning against essential economic reforms and tough budgetary discipline.

The centre-right opposition UMP party led by former president Nicolas Sarkozy said it would call a vote of confidence in response to the emergency action. Mr Hollande was gambling that the Socialist rebels would fall back into line in a confidence vote to ensure the survival of his government.

The drama erupted only weeks after Mr Hollande had seen his previously record-low popularity surge after the Islamist terror attacks in Paris last month in which 17 people died in assaults on the satirical magazine Charlie Hebdo and a kosher supermarket.

When it became clear on Tuesday morning that Manuel Valls, the reformist prime minister, could not be certain of winning a vote on the reform law, Mr Hollande convened an emergency ministerial meeting at the Elysée Palace.

He gave the greenlight to Mr Valls to use Article 49.3 of the French constitution, which allows a government to pass laws without a parliamentary vote.

“A majority may exist for this bill, but it is not certain,” Mr Valls told lawmakers. “I will therefore not take the risk of a rejection. (..) Nothing will make us move back, in the best interests of the French.”

The use of Article 49.3, last used nine years ago, means the package of law put together by Emmanuel Macron, the 37-year-old economy minister, will automatically pass unless the government is ousted in a no-confidence vote.

The bill has been hailed by the French government as evidence that it is serious about implementing structural reforms urged by its European partners. A rejection would have sent the wrong signal to the European Commission, a week before deciding whether to fine Paris for missing its deficit target.

The wide-ranging measures will extend Sunday trading hours, shorten labour arbitration procedures and deregulate notary and legal professions, among other reforms.

Economists have broadly welcomed the bill, which comes on top of tax cuts worth as much as €40bn by 2017 to help companies reduce labour costs. The bill and the tax breaks are the two main initiatives underpinning Mr Hollande’s attempts to boost economic growth and curb record unemployment two years before presidential elections. A recent poll suggested that more than 60 per cent of the French viewed Mr Macron’s law favourably.

“The French want this law: they are obviously ready to move forward,” said Laurent Bigorgne, director at Institut Montaigne, a Paris free market think-tank. “The path for reforms has been cleared. I hope the government will seize that opportunity to accelerate the pace of reforms.”

But the debate in parliament has been long and painful so far. Mr Macron — believed to be too pro-business by some within the Socialist party because of his 18-month stint as a Rothschild banker four years ago — spent more than three weeks trying to overcome fierce opposition from the left and the right, underscoring the government’s thin margin for manoeuvre to pass substantial reforms in parliament.

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http://www.ft.com/intl/cms/s/0/3e2f4314-b67b-11e4-a5f2-00144feab7de.html