February 17, 2015 / 12:12 AM / 3 years ago

French PM uses decree to pass economic reform bill

French President Francois Hollande (L) and Prime Minister Manuel Valls leave after a news conference at the Elysee Palace in Paris February 5, 2015. REUTERS/Philippe Wojazer

PARIS (Reuters) - French Prime Minister Manuel Valls defied critics from left and right on Tuesday by declaring he would ram a flagship economic reform bill through parliament by decree, bypassing backbench rebels but exposing his government to a no-confidence vote.

The package, which includes rules to broaden trading hours and deregulate some sectors, is aimed at spurring growth and persuading the European Commission to give Paris more time to get its public finances into line with EU rules.

Although the liberalizing reforms are mild by the standards of many European countries, they sparked a revolt by dozens of back-bench lawmakers in the ruling Socialist party, putting the government’s majority in doubt.

It is the first time since 2006 that any government has used a constitutional mechanism to push through a bill without a vote, triggering complaints that the reformist Valls was being authoritarian and short-circuiting parliament.

“There was probably a majority for this bill but it was not sure so I decided to take no chances - I couldn’t risk seeing a plan so crucial to our economy be rejected,” he told lawmakers minutes before the vote had been due.

“Nothing will make us give up, nothing will make us retreat - the national interest of the French people requires it.”

The main opposition party, ex-president Nicolas Sarkozy’s conservative UMP, immediately proposed a no-confidence motion, which will be debated with a vote in the next 48 hours, most likely on Thursday. If the motion fails, the decree is deemed to have been adopted.

“The government should win this confidence vote, since an absolute majority of lawmakers have to vote against the government for it to be toppled,” BNP economist Dominique Barbet said. The Socialists and their allies combined have an absolute majority in the 566-seat lower house.

RED TAPE

The bill cuts red tape in a wide variety of areas including allowing more shops to open on Sundays and evenings, speeding up job dismissal procedures, opening up long-distance bus routes and exposing the legal professions to more competition.

Polls show 60 percent of the public back the legislation, which responds to longstanding European Commission demands that France open up closed professions to boost its stagnant economy.

But it is viewed as too pro-business by lawmakers on the left of the Socialist party. Labor unions have taken to the streets in protest, while professions such as notaries, bailiffs and court clerks have also demonstrated against deregulation.

“This is an admission of weakness, a denial of democracy and an anti-parliament weapon,” Greens lawmaker Emmanuelle Cosse said on her Twitter account.

But in nearly 200 hours of debate in parliament and despite more than 1,000 amendments, the government has largely stood its ground on what is France’s main attempt to convince a skeptical EU that the euro zone’s second-biggest economy is carrying out enough reforms to win a new reprieve on budget targets.

Government officials hope the law spearheaded by Economy Minister Emmanuel Macron, who influenced Hollande’s pro-business policy shift last year, will help boost growth, but they are not putting a precise figure on its impact.

Societe Generale analyst Michel Martinez said the bill was a welcome move to cut red tape but “will not change the face of France” and will have a limited macroeconomic impact, boosting GDP by about 0.5 percent a year within five to 10 years.

(This story inserts dropped word “adopted” in paragraph 7)

Additional reporting by Emile Picy, Marine Pennetier and Nicholas Vinocur; writing by Mark John; Editing by Paul Taylor

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