ReportWire

Tag: pensions

  • The company supplying water to millions of Londoners is in deep trouble | CNN Business

    The company supplying water to millions of Londoners is in deep trouble | CNN Business

    [ad_1]


    London
    CNN
     — 

    Britain’s biggest water supplier said Wednesday it needed to raise more cash from investors, as UK media reported the government was preparing contingency plans to rescue the company.

    Thames Water provides drinking water and waste water services to 15 million customers in London and the southeast of England. The utility, which counts one of Canada’s largest public pension funds among its top investors, has around £14 billion ($17.5 billion) of debt on its balance sheet.

    News that it needs more money came just a day after CEO Sarah Bentley resigned with immediate effect after three years in the role. She was in the second year of an eight-year turnaround plan to address aging infrastructure, tackle leakage and reduce pollution in rivers, a legacy of underinvestment.

    Thames Water received £500 million ($635 million) from shareholders in March, but said Wednesday it would need more.

    The firm “is continuing to work constructively with its shareholders in relation to the equity funding expected to be required to support Thames Water’s turnaround and investment plans,” it added.

    The company said it was keeping the water industry regulator Ofwat “fully informed” of its progress and added that it had a “strong liquidity position,” including £4.4 billion ($5.6 billion) of cash.

    Ofwat said it was in “ongoing discussions” with Thames Water “on the need for a robust and credible plan to turn the business around.”

    “We will continue to focus on protecting customers’ interests,” it added.

    Government ministers, including representatives from the UK Treasury and the environment department, Defra, are holding emergency talks with Ofwat over Thames Water’s future, according to UK media reports.

    One possibility would be to place the company into a special administration regime that effectively takes the firm into temporary public ownership. Sky News was first to report the discussions.

    A government spokesperson told CNN: “This is a matter for the company and its shareholders. We prepare for a range of scenarios across our regulated industries — including water — as any responsible government would.”

    The spokesperson added that the UK water sector “as a whole is financially resilient.”

    Thames Water says about 24% of the water it supplies to customers is lost through leakage.

    The company’s single biggest shareholder is the Ontario Municipal Employees Retirement System, which holds a stake of around 32%. The Universities Superannuation Scheme, a pension fund for the academic staff of UK universities, owns nearly 20%.

    Other large investors include the Chinese and Abu Dhabi sovereign wealth funds, as well as British Columbia Investment Management Corporation, which invests on behalf of public sector workers.

    [ad_2]

    Source link

  • Embattled Macron struggles to reconnect with France

    Embattled Macron struggles to reconnect with France

    [ad_1]

    DUNKIRK, France — Emmanuel Macron couldn’t have hoped for a more engaging crowd.

    A group of women — workers with hard helmets and protective gear — were asking for a photo. “You’re being mobbed by the women of Aluminium Dunkerque!” they laughed.

    Standing amid the crowd of factory workers in the port city of Dunkirk, the French president was in his element: shaking hands, fielding questions and taking selfies. “Any more questions?” he asked.

    But he did not address the elephant in the room. And none of the blue-collar workers shouted about Macron’s unpopular, controversial pensions reform. It wasn’t that nobody dared ruin the unveiling of an electric battery giga-factory project; Rather these workers had been hand-picked by their employer.

    In the past weeks, Macron has been hitting the road across France visiting towns big and small, in what he has called a bid to “engage” with the people after the bruising debates over his controversial pensions reform.

    France has been rocked by weeks of protests in the wake of the French president’s decision to bypass parliament and push through a reform raising the age of retirement to 64 from 62. The forcing through of the reform was widely seen as yet another manifestation of Macron’s famously “Jupiterian” governance style — a vertical, top-down manner of running the country.

    Though nationwide protests have ebbed since the reform became law in April, Macron’s initial visits had been dogged by ad-hoc demonstrations called casserolades [casserole protests], organized by trade unionists and protesters against his reforms. The tightly-controlled show in Dunkirk followed more tumultuous scenes during his initial visits. In the eastern region of Alsace, Macron faced booing crowds and power cuts during his visit to a local factory in April, which were claimed by the hard-line CGT trade union.

    In Dunkirk, police secure the area ahead of the French president’s visit | Clea Caulcutt

    For the French president, it has meant a clampdown on visits. Encounters with the public are minutely choreographed to avoid bad publicity, with details unveiled at the very last minute.

    In Dunkirk, over 1,000 police officers were deployed to secure the area visited by the president, erecting barricades, closing streets and banning cars in the town center. Such scenes are unusual in France where successive presidents have enjoyed freely mingling with the people. On the sidelines of his visit, POLITICO caught up with the French president to ask him about his charm offensive.

    “Of course, it’s great … I’m trying to reach out [to the people] … to explain the coherence of what we are doing. We get results when we are coherent and consistent,” he said.

    On his difficulties in connecting with the public, Macron said: “My visits are simple … The overwhelming majority of the French may be against the pensions reform … But I do not confuse people who disagree with me with the small minority that are prone to disrespect and invective.”

    Police surround a protestor during Macron’s visit to Alsace, April 2023 | Frederick Florin/AFP via Getty Images

    Grabbing the limelight

    In addition to touring the country in recent weeks, Macron has relentlessly blitzed the media sphere, granting multiple interviews to the French and international press, while putting forward a string of government proposals for improving education, tackling immigration and bringing back industry.

    “In appearance, Emmanuel Macron and [his prime minister] Elisabeth Borne adopted a very efficient strategy. In drowning out the news, with their visits, their proposals and their new measures, they were able to impose a new agenda,” said Bruno Cautrès, a politics researcher at Sciences Po University.

    “But the data shows that the public has not moved on,” he added. This month several polls showed a majority of the French still support the protest movement against the president’s centerpiece reform.

    Even if nationwide protests over the pensions reform have tapered off, concerns are rising about increasing violence against elected officials and personal attacks against the president. In the southern city of Avignon, residents woke up last week to find dozens of posters depicting the French president as Hitler. That same week, Brigitte Macron’s great-nephew was assaulted in Macron’s hometown of Amiens in an apparent politically-motivated attack.  

    Fixing France

    Beyond the accusations that Macron’s pensions reform push was too brutal, and too disrespectful of parliamentary democracy, the recent political turmoil has political commentators discussing a “democratic crisis” in France.

    Some say France needs a constitutional reform, others that political life has become too polarized. According to Sylvain Fort, a former advisor to the French president, the mainstream left and right in France still haven’t recovered from his victory in 2017.

    “My great surprise is that opposition parties are still shadows of their former selves. It’s not the president that is stopping the opposition from rebuilding itself. The president doesn’t want the democratic debate to be sterile, it’s the result of years of neglect,” he said.

    Instead, the far-right and the far-left parties have dominated the political debate in France.

    In Dunkirk, Macron eschewed ideology and hoped to make one point clear: his tough choices are bringing jobs and investment back to France. But by the same token, if Macron’s reform drive grinds to a halt, his government will face significant challenges.

    “If after all the [recent] proposals he has made, we see that in a year’s time, nothing has progressed … then yes, he will find it very difficult to finish his mandate,” said Cautrès.

    The government has already had to delay tackling a key issue — migration — because of a lack of consensus and parliamentary support. Depending on the evolution of Macron’s reconnect-with-the-people tour, his second-term agenda could be severely upended, rendering him a lame-duck president.

    Fixing the economy may not be enough to rekindle trust between the French and their president.

    [ad_2]

    Clea Caulcutt

    Source link

  • France is still mad about a hike in the retirement age. But can the protests last? | CNN

    France is still mad about a hike in the retirement age. But can the protests last? | CNN

    [ad_1]


    Paris
    CNN
     — 

    Clashes erupted in Paris on Monday marking May 1, a traditional day of union-led marches, in the wake of hugely unpopular changes to France’s pension system that were signed into law last month.

    One of France’s largest unions, the CGT, had called for “historic” protests following months of unrest and widespread strikes that saw transport grind to a halt and garbage mount in the streets of Paris.

    A CNN team on the ground reported chaotic scenes from the protests, having witnessed fireworks and other projectiles thrown at the police who answered with tear gas as they retreated and regrouped. Ahead of the protest the police had warned of a heightened risk of violence, with at least 30 people arrested as a result of Monday’s demonstrations, according to CNN affiliate BFMTV.

    Protesters were forcibly pulling detained civilians out of the police’s arms.

    One officer hit by a Molotov cocktail received treatment after sustaining what seemed to be “serious burns,” according to a spokesman with the Paris police.

    Policemen look on during Monday's demonstrations, with fierce clashes between security officials and protesters leading to dozens of arrests.

    France’s Constitutional Council, which plays a similar role to the US Supreme Court, in April approved the most controversial part of the reform – the raising of the retirement age from 62 to 64.

    Despite the decision, some of France’s powerful unions say they will fight on, with the question now whether this anger will plague the rest of Macron’s time in office or disappear from the streets.

    Here’s all you need to know about the pension reforms.

    For the French “it was never about the age of retirement,” said political scientist Dominique Moïsi, “but the balance between work and life.”

    Pensions reform has long been a thorny issue in France. In 1995, weeks-long mass protests forced the government of the day to abandon plans to reform public sector pensions. In 2010, millions took to the streets to oppose raising the retirement age by two years to 62 and in 2014 further reforms were met with widespread demonstrations.

    “Each time there is opposition from public opinion, then little by little the project passes and basically, public opinion is resigned to it,” Pascal Perrineau of Sciences Po university said.

    For many in France, the pensions system, as with social support more generally, is viewed as the bedrock of the state’s responsibilities and relationship with its citizens.

    The post-World War II social system enshrined rights to a state-funded pension and health care, which have been jealously guarded since, in a country where the state has long played a proactive role in ensuring a certain standard of living.

    How Macron pushed through these reforms – bypassing a parliamentary vote – inflamed tensions as much as their content, focusing anger on the president himself.

    “I don’t think in the history of the Fifth Republic, we have seen so much rage, so much hatred at our president. And I remember as a young student, I was in the streets of Paris in May ’68, and there was rejection of General de Gaulle but never that personal hatred,” Moïsi said.

    Macron is above all a business-minded president. Making France more business-friendly and government more efficient have been central to his mission.

    The young president made social reforms, especially of the pensions system, a flagship policy of his 2022 re-election.

    For Macron’s cabinet, the problem is money. The current system – relying on the working population to pay for a growing age group of retirees – is no longer fit for purpose, the government says.

    Labor minister Olivier Dussopt said that without immediate action the pensions deficit would reach more than $13 billion annually by 2027. Referencing opponents of the reforms, Dussopt told CNN affiliate BFMTV: “Do they imagine that if we pause the reforms, we will pause the deficit?”

    It is worth noting that the higher pension age will still keep France below the norm in Europe and in many other developed economies.

    State pensions in France are also more generous than elsewhere. At nearly 14% of GDP in 2018, the country’s spending on state pensions is larger than in most other countries, according to the Organization for Economic Cooperation and Development (OECD).

    The Constitutional Council’s decision means the reforms are going ahead.

    From September, the first retirees will have to wait an additional three months for their state pensions. With regular, incremental increases, by 2030 the retirement age will have reached 64.

    Protesters are unbowed. One told journalists in the immediate aftermath of the decision they would “fight until this reform is abandoned.”

    Between January and mid-April, despite sporadic violence, support for the protests grew by some 11%, figures from pollster IFOP in partnership with Fiducial/Sud Radio showed.

    Protestors stormed the headquarters of luxury giant  LVMH last month.

    In contrast, during the Yellow Vest protests, started in opposition to hikes in fuel prices, violence gradually soured public support. That these pensions protests continue to hold such popular goodwill is an ominous sign for Macron’s future plans.

    The size and violence of pensions protests spiked when Macron forced the legislation past the country’s lower legislative house without a vote. Since then, a determined minority has continued to protest – and a much smaller group to engage in violence. For now, with the law passed, momentum may have shifted away from mass street protests, even if flare-ups continue.

    But for an electorate the majority of whom did not pick Macron as their first choice, the May 1 marches will be a barometer of that anger, filmmaker David Dufresne, who directed a documentary on the Yellow Vest protests, told CNN.

    “Democracy by the street is back again,” he said.

    Macron is still not far into his second term, having been re-elected in 2022, and still has four years to serve as the country’s leader. Given French presidents serve fixed terms, his position is safe.

    Following the passage of the reforms, his government laid out a slew of policies promising additional funding for public services – nurse and teacher salaries included – tougher immigration measures and more environmental action in an effort to win back public support. But the horse may have already bolted for Macron’s efforts to woo back the public.

    Looking ahead to the next presidential election in 2027 – still far off on the political horizon – the anger Macron has stirred in the country’s streets doesn’t bode well for his party’s chances.

    While unions have led these protests, opposition politicians, political allies and even some in his own party have come out in support of the demonstrators.

    Macron has pressed on with his plans despite fierce opposition.

    In a re-run of the 2024 presidential run-off, with the far-right’s Marine Le Pen up against a candidate from Macron’s party, this popular anger may be enough to give pause to voters who supported Macron merely to stymie the far-right.

    “He failed to sell his logic and rationality,” Moïsi said, comparing Macron to Barack Obama, whose second term gave way to the presidency of Donald Trump.

    While Macron’s reforming crusade continues, the pensions controversy could ultimately force him to negotiate more, Perrineau warns – though he notes the French president is not known for compromise.

    His tendency to be “a little imperious, a little impatient” can make political negotiations harder, Perrineau said.

    That, he adds, is “perhaps the limit of Macronism.”

    [ad_2]

    Source link

  • King Charles state visit to France postponed amid violent pension protests | CNN

    King Charles state visit to France postponed amid violent pension protests | CNN

    [ad_1]



    CNN
     — 

    King Charles’s state visit to France has been postponed amid planned protests over the French government’s controversial pension reforms.

    Both France’s Élysée Palace and Buckingham Palace confirmed the trip had been shelved on Friday morning.

    The British monarch and Queen Consort were supposed to visit the country from Sunday through Wednesday, and they would have traveled to Paris and the southwestern city of Bordeaux. However a decision to postpone the visit was made after demonstrations turned violent in some areas, including Bordeaux, on Thursday.

    Clashes between groups of protesters angry over proposed pension reforms and police broke out after workers staged a national strike throughout Thursday, with flare-ups in Paris and regional capitals. In Bordeaux, demonstrators set fire to the entrance of the city hall during skirmishes with police, according to CNN affiliate BFMTV.

    The Élysée Palace said in a statement that the King’s state visit “will be rescheduled as soon as possible.”

    “In view of yesterday’s announcement of a new national day of action against pension reform on Tuesday, March 28 in France, the visit of King Charles III, originally scheduled for March 26-29 in our country, will be postponed,” the statement read.

    “This decision was taken by the French and British governments, after a telephone exchange between the President of the Republic and the King this morning, in order to be able to welcome His Majesty King Charles III in conditions that correspond to our friendly relationship,” it continued.

    A Buckingham Palace spokesperson confirmed the postponement to CNN, adding: “Their Majesties greatly look forward to the opportunity to visit France as soon as dates can be found.”

    A UK government spokesperson also confirmed the King would not travel to France next week, adding that “this decision was taken with the consent of all parties, after the President of France asked the British Government to postpone the visit.”

    Charles and Camilla were due to travel from France to Germany on Wednesday for a state visit. The second leg of the trip is still expected to go ahead.

    [ad_2]

    Source link

  • French airports, schools and oil refineries hit by national strike over pension age increase | CNN Business

    French airports, schools and oil refineries hit by national strike over pension age increase | CNN Business

    [ad_1]


    Paris
    CNN
     — 

    French transport networks, oil refineries and schools were hit by widespread disruption Thursday as workers staged a national strike to protest an increase in the retirement age that was pushed through parliament without a vote.

    Though sporadic demonstrations had popped up in Paris and other cities after the French government forced the bill through last week, Thursday marked the first day of coordinated action since then. It is the ninth day of strikes since the bill was introduced in January.

    Only two out of 14 metro lines in Paris were operating a normal service. RER train services, which run in the city and its suburbs, were severely reduced and only half of high-speed TGV trains were working. The nationwide strike has also affected air traffic, with 30% of flights impacted at Paris Orly airport.

    Unionized workers blockaded a major oil refinery in Normandy and another one in Fos-sur-Mer in the south of France, according to a government spokesperson.

    “We are intervening in a targeted manner to unblock oil storage tanks that are blocked by demonstrators,” the minister of energy transition, Agnès Pannier-Runacherin, said in a statement.

    “If the strike is a fundamental constitutional right, blockading is not one… The police is mobilized in difficult conditions and has my full support.”

    The government renewed its requisition order requiring workers to go back to work at the two blockaded refineries, the government spokesperson said.

    The government’s plan to raise the retirement age for most workers by two years was opposed by huge numbers of people. But despite protests that drew more than a million people onto streets across the country, President Emmanuel Macron’s government did not back down. It rammed the legislation through the French National Assembly last week using a constitutional clause that allows the government to bypass a vote.

    The country’s generous pension system and early retirement have long been a point of pride since they were enacted after World War II. Under the new law, the retirement age for most workers will be 64, still one of the lowest in the industrialized world.

    As a result of the refinery strikes, kerosene stocks at Charles De Gaulle airport, which serves Paris, were “under pressure,” and those at Orly airport were being monitored, according to the civil aviation authority.

    Earlier in the day, around 70 protesters blocked terminal one at Charles de Gaulle airport, an airport spokesperson told CNN.

    About 20% of teachers in public education also took part in the strikes, according to France’s education ministry.

    A protester stands near burning garbage bins during a demonstration as part of protests against the pension reform, in Nantes, France, March 23, 2023.

    Macron and his government have defended the retirement reform as necessary to keep the pension system funded. Taxes on current workers pay for the benefits of retirees, and as people live longer — and more baby boomers retire — the system would otherwise eventually go bankrupt, though the threat is not immediate.

    When the proposal was unveiled in January, the government said the reforms were necessary to prevent a projected 13.5 billion ($14.7 billion) euro hole opening up in the pension system in 2030.

    During an interview with two of France’s main television networks Wednesday, Macron said the bill should be enacted by the end of this year. He also defended the decision to push through the reform as financially necessary, no matter how unpopular it was.

    “It’s in the greater interest of the country. Between opinion polls and the national interest, I chose the national interest,” Macron said.

    — CNN’s Joseph Ataman and Olesya Dmitracova contributed to this report.

    [ad_2]

    Source link

  • After Macron, le déluge

    After Macron, le déluge

    [ad_1]

    Press play to listen to this article

    Voiced by artificial intelligence.

    Anyone looking at France right now could be forgiven for thinking the country was on the edge of a revolution.

    Major cities from Paris to Lyon erupted in riots overnight on Thursday, with black-clad protesters lighting bonfires and hurling projectiles at riot police after President Emmanuel Macron rammed an unpopular reform of the pension system through parliament. More than 400 police were injured.

    The violence capped weeks of mass protests as millions marched through French cities to oppose the reform, which will raise the legal age of retirement to 64 from 62 currently. More protests are already planned for next week, piling pressure on Macron’s already embattled government and prompting Britain’s King Charles to cancel a highly-awaited visit.

    Yet for all the sound and fury of the protests, which could yet worsen if students join in, there’s nearly zero risk that Macron himself will have to leave office. Having narrowly survived a vote of no confidence, he may seek to reshuffle his cabinet and sack his prime minister, Élisabeth Borne — but the presidential system is so designed that the leader is nearly guaranteed to remain president until the last day of his term, in 2027.

    The bigger question, then, is about what happens after Macron, whose hyper-personal style of leadership has often been described as king-like, even by the standards of France’s monarchical Republic, leaves the stage for good. 

    Barred from seeking a third term by the constitution, Macron will leave behind a leaderless and rudderless ruling party that may well cease to exist without him, creating a power vacuum that far-left and far-right leaders, including three-time presidential contender Marine Le Pen, are itching to fill. 

    And while Macron has a solid hold on power now, the parliamentary rebellion his government faced down this week — and the chaos engulfing the country — raise ominous questions about the future for anyone who hopes to see France stay firmly anchored to the pro-EU, pro-NATO liberal camp.

    In other words, after Macron, le déluge

    Macron’s shaky platform

    The first danger sign flashing over French democracy is the state of Macron’s own party, the centrist Renaissance group. In many systems, ruling parties have deep roots and an ideological foundation that, at least in theory, give them a raison d’être beyond exercising power. 

    But this isn’t the case for Macron’s party, which was born for the sole purpose of hoisting its founder into the Elysée presidential palace and then supporting his government. As such, it’s docile by nature and, with a few exceptions, hasn’t produced bold personalities who would in other circumstances be natural successors to the president. 

    And while the party is already short of a majority in parliament, the rebellion against the pension reform this week revealed Renaissance to be much weaker even than was previously thought — more of a hollow platform for Macron to stand on than a launchpad for future leaders. Indeed, Prime Minister Borne believed that she could rely on support from the center-right Les Républicains party to provide the necessary votes to pass the reform, as part of an informal coalition arrangement.

    Yet this hope vanished suddenly and unexpectedly when a group of 19 Les Républicains, led by southern lawmaker Aurélien Pradié, defied orders from their own party leadership and announced they would support a motion of no confidence in Macron’s government. As rebellions go, it revealed not just the weakness of Renaissance, but the continued disarray of the mainstream center-right in France — which has produced most of the country’s leaders since World War II and is now a shadow of its former self.

    “The political landscape isn’t just fractured; it doesn’t offer any hope for the president, the government or their supporters,” said Jean-Daniel Lévy, a political analyst with pollster Harris Interactive. “There is no such thing as a Macron doctrine or an ideological successor to Macron.”

    The rebellion against the pension reform this week revealed President Emmanuel Macron’s party to be much weaker even than was previously thought | John Macdougall/AFP via Getty Images

    The second alarm bell ringing is how much the pension crisis has emboldened the far-right and far-left factions in parliament. Take Jean-Luc Mélenchon, a far-left firebrand who’s made two failed bids for the presidency, and is now the most recognizable face in the NUPES, a recently-formed left-wing coalition gathering what’s left of the Socialist party, Mélenchon’s hard-left France Unbowed group and the Greens.

    Having faded from view, Mélenchon has roared back into the limelight during the pension reform battle, appearing constantly in the media. Anti-NATO, Euroskeptic and calling for an end to France’s 5th republic (his 6th Republic would end the presidential monarchy), the ex-socialist whose sympathies lean more toward Venezuela than Brussels is ideally suited to produce revolutionary soundbites.

    With his pension reform, Macron has “lit a fire and blocked all the exits,” Mélenchon quipped this week.

    Le Pen eyes the crown

    Yet Mélenchon’s prospects of taking power in 2027 look slim. According to an IFOP poll published in early March, just 21 percent of the French believe he’s best-positioned to lead the opposition — suggesting he’s not very well-loved by other adherents of the NUPES coalition.

    Much better positioned is Marine Le Pen, the far-right chief whom Macron defeated twice in the final rounds of two presidential elections. Indeed, since her last defeat, Le Pen has made further strides toward making herself look presidential while continuing to try to detoxify her party’s image.

    Not only has Le Pen ditched the “National Front” party name that was associated with her Holocaust-minimizing father, Jean-Marie Le Pen; she has abandoned an electorally-disastrous plan to exit the euro currency zone and she’s established herself as the leader of her party’s 88-strong delegation in the French parliament, placing her at the center of the action against the pension reform.

    She hasn’t confirmed that she’ll make a fourth bid for the presidency. But there’s no reason to believe she wouldn’t. And this time, Macron won’t be around to stop her.

    “After Macron, it will be us,” she told BFMTV this week, referring to her National Rally party.

    Aside from Le Pen, the obvious choice to succeed Macron would be Édouard Philippe — his remarkably beloved one-time prime minister. Since leaving office in 2017, Philippe has been quietly biding his time as mayor of Le Havre, a mid-sized port city on France’s northern coast, and nurturing his own center-right political platform, Horizons.

    The fact that Philippe, in an interview earlier this month, came out to address the fact that he’s suffering both from alopecia and vitiligo only seemed to bolster his popularity with the French, who rate him as their preferred political personality, according to this ranking.

    But Philippe’s stance on retirement, backing an increase in the legal age to 67 — above and beyond what Macron proposed — has not done him any favors. According to a poll by Odoxa, 61 percent of the French weren’t happy with his attempt to defend the pension reform.

    He still hasn’t said for sure whether he will run in 2027, and the past week’s action suggests his association with Macron could turn out to be a drag on his prospects once campaigning gets started, should he decide to enter the race.

    [ad_2]

    Nicholas Vinocur

    Source link

  • French workers may have to retire at 64 and many are in uproar. Here’s why | CNN

    French workers may have to retire at 64 and many are in uproar. Here’s why | CNN

    [ad_1]


    Paris
    CNN
     — 

    Impromptu protests broke out in Paris and across several French cities Thursday evening following a move by the government to force through reforms of the pension system that will push up the retirement age from 62 to 64.

    While the proposed reforms of France’s cherished pensions system were already controversial, it was the manner in which the bill was approved – sidestepping a vote in the country’s lower house, where President Emmanuel Macron’s party crucially lacks an outright majority – that arguably sparked the most anger.

    And that fury is widespread in France.

    Figures from pollster IFOP show that 83% of young adults (18-24) and 78% of those aged over 35 found the government’s manner of passing the bill “unjustified.” Even among pro-Macron voters – those who voted for him in the first round of last year’s presidential election, before a runoff with his far-right adversary – a majority of 58% disagreed with how the law was passed, regardless of their thoughts about the reforms.

    Macron made social reforms, especially of the pensions system, a flagship policy of his 2022 re-election and it’s a subject he has championed for much of his time in office. However, Thursday’s move has so inflamed opposition across the political spectrum, that some are questioning the wisdom of his hunger for reforms.

    Prime Minister Elisabeth Borne conceded in an interview Thursday night with TF1 that the government initially aimed to avoid using Article 49.3 of the constitution to crowbar the reforms past the National Assembly. The “collective decision” to do so was taken at a meeting with the president, ministers and allied lawmakers mid-Thursday, she said.

    For Macron’s cabinet, the simple answer to the government’s commitment to reforms is money. The current system – relying on the working population to pay for a growing age group of retirees – is no longer fit for purpose, the government says.

    Labor minister Olivier Dussopt said that without immediate action the pensions deficit will reach more than $13 billion annually by 2027. Referencing opponents of the reforms, Dussopt told CNN affiliate BFMTV: “Do they imagine that if we pause the reforms, we will pause the deficit?”

    When the proposal was unveiled in January, the government said the reforms would balance the deficit in 2030, with a multi-billion dollar surplus to pay for measures allowing those in physically demanding jobs to retire early.

    For Budget Minister Gabriel Attal, the calculus is clear. “If we don’t do [the reforms] today, we will have to do much more brutal measures in the future,” he said Friday in an interview with broadcaster France Inter.

    “No pensions reform has made the French happy,” Pascal Perrineau, political scientist at Sciences Po university, told CNN on Friday.

    “Each time there is opposition from public opinion, then little by little the project passes and basically, public opinion is resigned to it,” he said, adding that the government’s failure was in its inability to sell the project to French people.

    They’re not the first to fall at that hurdle. Pensions reform has long been a thorny issue in France. In 1995, weeks-long mass protests forced the government of the day to abandon plans to reform public sector pensions. In 2010, millions took to the streets to oppose raising the retirement age by two years to 62 and in 2014 further reforms were met with wide protests.

    An anti-pension reform demonstrator writes

    For many in France, the pensions system, as with social support more generally, is viewed as the bedrock of the state’s responsibilities and relationship with its citizens.

    The post-World War II social system enshrined rights to a state-funded pension and healthcare, which have been jealously guarded since, in a country where the state has long played a proactive role in ensuring a certain standard of living.

    France has one of the lowest retirement ages in the industrialized world, spending more than most other countries on pensions at nearly 14% of economic output, according to the Organisation for Economic Cooperation and Development.

    But as social discontent mounts over the surging cost of living, protesters at several strikes have repeated a common mantra to CNN: They are taxed heavily and want to preserve a right to a dignified old age.

    Macron is still early in his second term, having been re-elected in 2022, and still has four years to serve as the country’s leader. Despite any popular anger, his position is safe for now.

    However, Thursday’s use of Article 49.3 only reinforces past criticisms that he is out of touch with popular feeling and ambivalent to the will of the French public.

    Politicians to the far left and far right of Macron’s center-right party were quick to jump on his government’s move to skirt a parliamentary vote.

    “After the slap that the Prime Minister just gave the French people, by imposing a reform which they do not want, I think that Elisabeth Borne should go,” tweeted far-right politician Marine Le Pen on Thursday.

    Members of Parliament of left-wing coalition NUPES (New People's Ecologic and Social Union) hold placards as French Prime Minister Elisabeth Borne addresses deputies to confirm the force through of the pension law without a parliament vote on Thursday.

    The leader of France’s far-left, Jean-Luc Melenchon was also quick to hammer the government, blasting the reforms as having “no parliamentary legitimacy” and calling for nationwide spontaneous strike action.

    For sure, popular anger over pension reforms will only complicate Macron’s intentions to introduce further reforms of the education and health sector – projects that were frozen by the Covid-19 pandemic – political scientist Perrineau told CNN.

    The current controversy could ultimately force Macron to negotiate more on future reforms, Perrineau warns – though he notes the French President is not known for compromise.

    His tendency to be “a little imperious, a little impatient” can make political negotiations harder, Perrineau said.

    That, he adds, is “perhaps the limit of Macronism.”

    [ad_2]

    Source link

  • Macron on the brink: How French pensions revolt could wreck his presidency

    Macron on the brink: How French pensions revolt could wreck his presidency

    [ad_1]

    Press play to listen to this article

    Voiced by artificial intelligence.

    PARIS — French President Emmanuel Macron will face a moment of reckoning Thursday as lawmakers gear up for a final vote on the government’s deeply unpopular pension reform.

    The controversial bill, a centerpiece of Macron’s second term, has sparked weeks of nationwide protests led by trade unions and faced intense criticism from both the far left and the far right in the National Assembly.

    The French president wants to increase the legal age of retirement to 64 from 62 and extend contributions for a full pension in an effort to balance the accounts of France’s state pensions system — among the most generous in the world. According to projections from France’s Council of Pensions Planning, the finances of the pensions system are balanced in the short term but will go into deficit in the long term.

    Despite government concessions on various aspects of the bill in recent weeks, opposition to the reform remains very high, with polls saying two-thirds of French citizens oppose it.

    Speculation is running high that Macron might not have enough support in the National Assembly, and may choose a constitutional maneuver to bypass parliament — in a move that could unleash a political storm in France.

    On Thursday, the French Senate and the National Assembly are expected to cast a crucial vote on the second reading of the bill, after the Senate voted in favor last week. The outcome will determine the shape of Macron’s second term and stands to bear heavily on his legacy.

    The worst case: Macron loses the vote in parliament

    Losing the parliamentary vote would be a stunning defeat for the French president, who pinned his bid for a second term on his promises to reform France’s pensions system. But political commentators have been speculating in recent days that Macron’s Renaissance party doesn’t have enough votes to pass the bill.

    The French president lost its absolute majority in the National Assembly in parliamentary elections last June. He has since been forced into making ad-hoc deals with MPs from France’s conservative party Les Républicains. But the once-mighty conservatives appear split on the reform, despite assurances this week from their leader Olivier Marleix that there was “a clear majority” backing the bill.

    A defeat in parliament would have seismic and long-term repercussions for Macron’s second term and it is likely that the president’s trusted lieutenant Prime Minister Elizabeth Borne would have to resign in such a scenario. Party heavyweights however say they will not shy away from seeking a vote.

    “There will be a vote, we want a vote, everyone must take its responsibilities,” said Aurore Bergé, leader of the Renaissance group in the National Assembly.

    “There can be an accident … we’ll manage it as we can,” admitted Jean-Paul Mattei, a centrist MP who belongs to Macron’s coalition, with reference to a defeat in parliament.

    However, this is the most unlikely scenario as expectations are that the government will bypass a vote if they sense that they are short on votes.

    Protestors hold an effigy of French President Emmanuel Macron, during a demonstration on the 8th day of strikes and protests across the country against the government’s proposed pensions overhaul in Paris on March 15, 2023 | Alain Jocard/AFP via Getty Images

    Pretty bad: Macron bypasses parliament and loses credibility

    In the face of a potential defeat in the National Assembly, Macron has a nuclear option: invoke article 49.3 of the French constitution. This mechanism allows the government to force through legislation without submitting it to a vote.

    While the constitutional maneuver may seem like an easy way out, it’s a highly risky move as it allows lawmakers to table a motion of no confidence within 24 hours. Macron’s government has faced down motions of no confidence in the past but the stakes are much higher this time around.

    Beyond surviving a motion of no-confidence, Macron and Borne will also come under fire for refusing to submit to the democratic process.

    According to Frédéric Dabi, general director of the IFOP polling institute, the impact on public opinion if the government uses the 49.3 article as opposed to passing a tight vote in parliament would be “radically different.”

    “Public opinions on the 49.3 article have changed … it is regarded as a tool to brutalize the National Assembly: it’s now seen as authoritarian instead of merely authoritative. People want more transparency, more democracy today,” he said.

    France’s hardline unions would no doubt use this to stoke unrest and call for further strike action.

    Trade union leader Laurent Berger has warned the government against using the 49.3 article, saying that it would be “incredible and dangerous.”

    “Nobody can predict what will happen, the protest movement seems to be running out of steam, but if the government invokes article 49.3 it could be read as forcing the issue and may relaunch the protest movement,” said Dabi.

    Still not great: Macron wins vote but faces mass protests

    If the French president wins the vote in parliament, it’ll be seen as a victory but one that may completely drain his political capital, and whip up protests on the streets.

    “It’ll be a victory for Macron, but it’ll only bear its fruit in the long term. In the short term, he’ll face a tense country where relations have become very strained,” said Chloé Morin, a writer and political analyst.

    Trade union leader Berger has said that he would “take on board” the result of Thursday’s vote in parliament. But protests, which have been almost weekly since January, may continue nonetheless across the country in an effort to force the government into backing down and withdrawing the text.

    Morin thinks it is unlikely there will be “an explosion of protests” after the vote as people are resigned to seeing it pass.

    French police officers intervene during a protest by local council employees against the government’s retirement reform in front on the prefecture in Seine Saint-Denis, in Bobigny, a surburb of Paris on March 14, 2023 | Thomas Samson/AFP via Getty Images

    “However, the protest movement might become more radical with lightning protests or sabotages, led by a minority in the citizens’ movement,” said Morin.

    In October last year, industrial action in France’s refineries led to nationwide shortages at petrol stations, forcing the government to intervene in what was seen as Macron’s biggest challenge since his re-election last year.

    There are dangerous precedents for Macron too. In December 2019, the government was forced to abandon a new green tax when faced with the explosive Yellow Vests protests that shook the political establishment.

    [ad_2]

    Clea Caulcutt

    Source link

  • Macron’s defiant show of force in parliament exposes a weakened president

    Macron’s defiant show of force in parliament exposes a weakened president

    [ad_1]

    Press play to listen to this article

    Voiced by artificial intelligence.

    PARIS — French President Emmanuel Macron’s decision to bypass parliament and impose his deeply unpopular pensions reform has revealed an uncompromising and weakened leader who now faces severe backlash from emboldened opposition lawmakers and protesters.

    Macron had vowed to abandon his top-down approach to politics and work with opposition parties during his second term. But when it comes to old-style politicking, Macron’s troops still have a lot to learn.

    Despite intense lobbying efforts with MPs and frantic meetings at the Elysée on Thursday and in the weeks leading up to the decisive moment, the French president and his stalwart lieutenant Prime Minister Elisabeth Borne faced the likelihood of a defeat in parliament and decided instead to invoke a controversial constitutional tool — article 49.3 — to bypass a vote.

    “My political interest would have been to submit to a vote … But I consider that the financial, economic risks are too great at this stage,” Macron privately told ministers according to a participant at the meeting.

    Macron’s flagship pensions reform aims to increase the legal age of retirement to 64 from 62 and extend contributions for a full pension in an effort to balance the accounts of France’s state pensions system. Macron’s Renaissance party lost its absolute majority in the National Assembly in parliamentary elections last year, but the government was able to pass legislation in recent months with the support of the conservative party Les Républicains. It appears, however, that in the nail-biting run-up to the vote, there were concerns the president wasn’t able to rally enough troops in favor of the bill.

    Arriving in parliament on Thursday, Borne faced scenes of anger and unrest in the National Assembly as she made her announcement triggering article 49.3. Far-left lawmakers from the France Unbowed party booed and chanted the national hymn the Marseillaise as far-right National Rally MPs shouted “Resign! Resign!” The speaker of the house was forced to suspend debates to allow Borne to make her speech.

    “We can’t take the risk of seeing 175 hours of parliamentary debate come to nothing,” Borne said.

    After the announcement, opposition MPs vowed to continue the battle against the reform, either in parliament, by supporting a motion of no-confidence, or in the streets.

    The leader of the far-right National Rally, Marine Le Pen, slammed the move as a “personal failure” for Macron. “It’s his reform, he’s the one who proposed it and defended it during his campaign,” she told reporters at the National Assembly.

    Spontaneous protests erupted Thursday evening in several cities across France, including Paris, where thousands of protestors descended on the Place de la Concorde after the move, clashing with police and setting fire to scaffolding. Trade unions called for a day of protest on March 23, undeterred by Macron’s decision to push through the legislation.

    Article 49.3, ‘a denial of democracy’

    Invoking article 49.3 is widely seen as a perilous move for the government as it allows MPs to put forward a motion of no-confidence within 24 hours and risks radicalizing protest movements in France. Trade unions have already shown great unity and led almost weekly marches and strikes, bringing out hundreds of thousands of citizens to the streets. In Paris, a strike by garbage collectors has seen an estimated 7,000 tons of garbage left on the street.

    While the French constitution does allow governments to bypass parliament under certain conditions, its use is increasingly seen as undemocratic in France amid social tensions and the growing mistrust of politicians.

    “The government’s use of the 49.3 procedure reflects the failure of this presidential minority,” Charles de Courson, a longtime independent lawmaker, told the BFMTV news channel.

    “They are not just a minority in the National Assembly, they are a minority in the whole country. The denial of democracy continues,” he said.

    Speaking ahead of the vote, Frédéric Dabi, general director of the IFOP polling institute, said that opinions on invoking article 49.3 — as opposed to passing a tight vote in parliament — are “radically different.”

    “Public opinions on the 49.3 article have changed … it is regarded as a tool to brutalize the National Assembly: it’s now seen as authoritarian instead of merely authoritative. People want more transparency, more democracy today,” he said.

    But the show of force also exposes a weakened president, who after having lost a majority in parliament and amid low popularity ratings, was unable to turn the tide of public opinion in France.

    Surviving now, and later

    In the short term, the government will have to survive several motions of no-confidence that are expected to be voted on Monday. Macron’s government has faced down motions of no confidence in the past but the stakes are much higher this time around.

    “It’s maybe the first time that a motion of no-confidence may overthrow the government,” Green MP Julien Bayou told reporters, adding that the government was “prepared to wreak havoc” in the country.

    Longer term, the move destroys prospects of a closer alliance between Macron’s Renaissance party and the conservative Les Républicains following a string of ad-hoc deals in recent months. In a worrying sign for Macron’s second term, as the debates on the pensions reform reached a climax, the leadership of the conservative party could not muster its own faithful despite concessions on the bill from the ruling party.

    The great irony for Macron — needing partners and not finding them — is that he is the man who upended France’s political landscape by crushing the traditional left-wing and right-wing parties in 2017.

    The dilemma for Macron is how he will get anything done in the next four yours of his presidency, given the reinvigorated opposition he is sure to face in a parliament dominated by the far left and the far right, and without reliable coalition partners.

    Perhaps the only silver lining for Macron is the view from abroad.

    “On the international scene, it’s a sign that France can make reforms, even if, frankly, many may think we are having a nervous breakdown over something so small, given that the government has made so many concessions [on the bill],” said Chloé Morin, a writer and political analyst ahead of the vote.

    “Everybody knows that [reforming pensions] in France is difficult …That’s what’s at stake for Macron: he is a president who is building his legacy,” she said.

    [ad_2]

    Clea Caulcutt

    Source link

  • Macron pays high price in popularity over pension reform, survey shows

    Macron pays high price in popularity over pension reform, survey shows

    [ad_1]

    Emmanuel Macron is paying a high price for his push on pension reform as a survey on Sunday showed the French president is facing a new low in popularity — as low as during the protests of the so-called Yellow Jackets.

    As the French take to the streets to protest against Macron’s pension reform, 70 percent of respondents said they are dissatisfied with the president, according to the Ifop barometer published by Le Journal du Dimanche. Macron’s popularity rating fell by 4 points in one month, it showed.

    Since December, Macron has suffered a substantial drop of 8 points, and he now sees only 28 percent satisfied and 70 percent dissatisfied, according to the poll carried out, Le Figaro emphasized, between March 9 and 16.  

    That is the same period as the negotiations that finally led the Elysée to shun parliament and impose the unpopular pension reforms via a special constitutional power, the so-called Article 49.3, which provides that the government can pass a bill without a vote at the National Assembly, the lower house of parliament, after a deliberation at a Cabinet meeting.

    The procedure has been used in the past by various governments. But this time it’s prompting a lot of criticism because of the massive public opposition to the proposed reform, which raises the legal retirement age from 62 to 64 years. Some media stress that recent opinion polls have shown that a majority of the French are opposed to this type of procedure.

    “You have to go back to the end of the Yellow Jackets crisis in early 2019 to find comparable levels of unpopularity,” writes Le Journal du Dimanche commenting the survey. The outlet also stresses that dissatisfaction with Macron crosses all categories, the younger generations as well as the blue- and white-collar workers.

    A total of 169 people, including 122 in Paris, were taken in custody for questioning on Saturday evening in France during demonstrations marred by tensions between the police and the protesters, according to French media citing figures communicated on Sunday by the Ministry of the Interior. 

    [ad_2]

    Jacopo Barigazzi

    Source link

  • Macron narrowly survives crucial no-confidence votes in parliament

    Macron narrowly survives crucial no-confidence votes in parliament

    [ad_1]

    Press play to listen to this article

    Voiced by artificial intelligence.

    PARIS — Emmanuel Macron’s government narrowly survived a no-confidence vote in the French parliament Monday, after it pushed through a deeply unpopular pensions overhaul without a vote last week, sparking outrage and spontaneous protests across the country.

    In a high-stakes vote in France’s lower house of parliament, 278 MPs, mostly from the left and the far right, voted in favor of a cross-party motion of no confidence, falling just short of the 287 votes needed to topple the government. A second motion, backed only by the far-right National Rally, did not garner enough votes.

    The outcome of the first vote was much tighter than anticipated and increases the pressure on Macron to withdraw his reform. It may also give a boost to the protest movement led by trade unions against the measures. The French president will also be under pressure to respond either by addressing the country or reshuffling his government.

    Speaking ahead of the votes, the centrist MP Charles de Courson, one of the authors of the cross-party motion, accused Macron’s government of lacking “courage” during the parliamentary debates.

    “You could have submitted [your reform] to a vote, and you probably would have lost it, but that’s the game when you are in a democracy,” he told MPs.

    The leader of Macron’s Renaissance parliamentary group Aurore Bergé lashed out at accusations the government had failed to seek compromises with MPs and accused opposition parties of working against the common good.

    “When people speak of a grand coalition, it should be so that people work together for the good of the country. It’s the opposite that you are offering us … you want to bring our country to a halt, in our institutions and … in the street,” she said.

    The motions of no confidence were proposed last week after Macron authorized the use of a controversial constitutional maneuver on Thursday to bypass a vote in parliament on his pensions reform bill. The French president wants to raise the legal age of retirement to 64 from 62, in an effort to balance the accounts of France’s indebted state pension system and to bring France’s retirement age in line with other European countries such as Spain and Germany where it ranges from 65 to 67 years old.

    The no-confidence motions were voted on in the National Assembly as industrial action disrupted flights, public transport, waste collection and refineries ahead of a nationwide day of protests on Thursday. Trade union leaders hope for a show of force against the government and have also warned that social unrest risks spiraling after several protests in Paris turned violent in recent days.

    “I send this alert to the president, he has to withdraw the bill before there’s a disaster. [Our protests] have been very controlled since the beginning, but the temptation of violence, of radicalization … is there,” said CFDT trade union leader Laurent Berger on Sunday.

    While the government has survived efforts to topple it, speculation is now running high that Macron will want to replace his beleaguered Prime Minister Elisabeth Borne in a government reshuffle aimed at refreshing his image. According to an IFOP-JDD poll published on Sunday, Macron’s popularity rating fell by 4 points in one month to 28 percent.

    A tight win for Macron

    Monday’s no-confidence motions had been widely seen as unlikely to pass ahead of the vote because the French National Assembly has been deeply divided since parliamentary elections last year. While Macron’s Renaissance party has lost its absolute majority, opposition parties backing the no-confidence motion failed to get enough votes because most MPs from the conservative Les Républicains refused to support it.

    Still, more conservative MPs than expected decided to ignore the party line and back the cross-party motion of no confidence, exposing the deep divides within Les Républicains.

    Elisabeth Borne will live to see another day as French Prime Minister | Pool photo by Gonzalo Fuentes/AFP via Getty Images

    On Monday, one of the leading rebels, conservative MP Aurélien Pradié, said voting in favor of the motion of no-confidence was needed to “emerge from the chaos.”

    “The Macron club has not understood what is going on. And if we need to jolt them with a motion of no-confidence, I will back it and lend my voice to the people who feel disdained,” he told Europe 1 radio.

    This article has been updated with more details on the votes.

    CORRECTION: An earlier version of this article misstated the number of MPs who voted in favor of a cross-party motion of no confidence.

    [ad_2]

    Clea Caulcutt

    Source link

  • Parisian streets littered with trash after wave of strikes | CNN

    Parisian streets littered with trash after wave of strikes | CNN

    [ad_1]


    Paris
    CNN
     — 

    The City of Lights has a garbage problem.

    Massive strikes in Paris against pension reform this week are affecting trash pickup services in the French capital, with piles of waste sitting on many of the city’s normally picturesque streets, including those just steps from monuments like the Eiffel Tower and the Arc de Triomphe.

    As of Saturday, about 4,400 tonnes of trash were awaiting collection, a spokeswoman for the Paris mayor’s office said. The spokeswoman said that the problem is a blockage at trash incinerators caused by the strikes. Garbage trucks have thus been unable to pick up waste in much of the city because they have nowhere to put it.

    Not all neighborhoods have been equally affected. The municipal government is in charge of garbage collection in half of Paris’ 20 arrondissements. Private contractors are responsible for the other 10.

    Municipal services like trash collection in Paris have been affected since Tuesday, when strikes saw flights and trains canceled and delayed; oil refiners blockaded; schools shuttered; and left thousands without electricity. The French capital was the most affected, with nearly 60% of its primary school teachers walking out and the local metro forced to cut service to all but the busiest times.

    Massive protests have been staged regularly throughout France since January 19, with more than a million people coming out multiple to voice their opposition to the government’s plan to raise the official retirement age for most workers as part of reforms to the government’s pension system, one of Europe’s most generous.

    As of Saturday, about 4,400 metric tones of trash were awaiting collection on the streets of Paris, a spokeswoman for the mayor's office said.

    President Emmanuel Macron’s government says the changes are necessary to make the system financially stable.

    The trash buildup in Paris has been sparked health concerns among Parisians and local politicians. The mayor of the 17th arrondissement, Geoffroy Boulard, said in an interview with CNN affiliate BFMTV that he has asked Paris Mayor Anne Hidalgo to hire a private service provider to intervene.

    “We can’t wait,” he said. “This is a matter of public health.”

    Boulard said he’s also worried about the proliferation of rats and rodents as well as Paris’ image.

    Another local mayor, Jean-Pierre Lecoq of the 6th arrondissement, asked Hidalgo to intervene in an open letter he published on Twitter.

    [ad_2]

    Source link

  • French Senate adopts pension reform as street protests continue

    French Senate adopts pension reform as street protests continue

    [ad_1]

    The French Senate voted in favor of the controversial pension reform overnight, paving the way for a potential final adoption of the law on Thursday, as thousands of people continue to demonstrate across the country.

    The widespread opposition to the retirement overhaul is a political test to French President Emmanuel Macron, whose liberal party has been struggling to pass the reform ever since it lost its majority in parliament last summer.

    “A decisive step to bring about a reform that will ensure the future of our pensions. Totally committed to allow a final adoption in the next few days,” French Prime Minister Elisabeth Borne tweeted after the vote.

    The French government wants to change the retirement age from 62 to 64, with a full pension requiring 43 years of work as of 2027. The right-leaning Senate adopted the reform with 195 in favor and 112 against the measure.

    Hundreds of thousands of people demonstrated across France on Saturday, and protests were expected to continue on Sunday. So far, strikes have disrupted sectors including public transport, oil refineries, schools and airports.

    On Sunday, Laurent Berger — who heads the largest French labor union — said: “I call on parliamentarians to see what’s happening in their districts. … You can’t vote for a reform that’s rejected by so many in the workforce.”

    During the presidential campaign, Macron vowed to reform the French pension system to bring it in line with other European countries like Spain and Germany, where the retirement age is 65 to 67 years old.

    Official forecasts show that the French pensions system is financially in balance for now, but it’s expected to build up a deficit in the longer term.

    French labor unions are calling for a “powerful day of strikes and demonstrations” on Wednesday, when lawmakers from the Senate and National Assembly are set to hold a small-group meeting to find a compromise on the pensions revamp. If they do reach an agreement, the law could be adopted on Thursday.

    The government could also ultimately decide to adopt the revamp using an exceptional procedure that requires no parliamentary vote.

    [ad_2]

    Sarah Anne Aarup

    Source link

  • Day of reckoning for Macron on French pension reform

    Day of reckoning for Macron on French pension reform

    [ad_1]

    Press play to listen to this article

    Voiced by artificial intelligence.

    PARIS — France is bracing for a day of severe disruptions and strikes on Thursday as trade unions and opposition parties vow to force the government to abandon French President Emmanuel Macron’s flagship pensions reform.

    Schools, universities and public administrations are expected to close, public transport will be severely affected and demonstrations are planned in major cities across the country.  

    “It’s going to be a [day] of hassles… It’ll be a Thursday of great disruption of public services,” warned Transport Minister Clément Beaune.

    Workers are protesting the government’s decision to raise the legal retirement age to 64 from 62. As part of the proposed overhaul, the number of years of contributions needed for a full pension will also rise faster than previously planned and will be set at 43 years from 2027.

    This is one of the biggest tests for Macron since losing outright majority in parliament in June. Macron was reelected last year on promises he would reform France’s public pension system and bring it in line with European neighbors such as Spain and Germany where the legal age of retirement is 65 to 67 years old. According to projections from France’s Council of Pensions Planning, the finances of the pensions system are balanced in the short term but will go into deficit in the long term.

    “Whatever pension projection you look at, the system will be go into the red within 15 years… it is difficult to deny the funding issues … The level of expenditure has stabilized but it’s simply higher than the revenues,” said Antoine Bozio, director of the Institute of Public Policy in Paris.  

    French polls suggest that the French are opposed to the reform but are aware of the need to overhaul state pensions. There is, however, deep disagreement on how to achieve that. Both the far-right National Rally party and the leftwing NUPES coalition staunchly oppose pushing back the age of retirement to 64 and argue that it will unfairly hit French working classes. Both groups vow to fight the government and stall debates as the pensions bill goes through parliament.

    “The Macron-Borne reform is a serious step back for French welfare,” tweeted Jean-Luc Mélenchon, leader of the far-left France unbowed party — which is planning a second day of protests on Sunday.

    Macron is hoping to get the votes of the conservative Les Républicains to get the reforms passed in parliament, where he does not have absolute majority.

    In the battle to win over public opinion, French Prime Minister Elisabeth Borne, who unveiled the reform last week, has repeatedly maintained that the changes include several measures that benefit the poorest. The government plans to increase the minimum monthly pension by close to 10 percent to €1,200 for low-income earners, and vows to improve access to early retirement schemes for employees who work in difficult professions.

    According to Bozio, while the government’s aim is primarily to balance the books amid increased funding needs for health, education and support for businesses, there are legitimate questions over the fairness of the reform.

    “Pushing back the retirement age will not hit the poorest in France, so in that sense the reform is fair,” said Bozio referring to precarious workers who have checkered careers and often leave the workforce later at 67 years old.

    In the battle to win over public opinion, French Prime Minister Elisabeth Borne has repeatedly maintained that the changes include several measures that benefit the poorest | Pool photo by bertrand Guay/AFP via Getty Images

    However, lower-income groups, who start work early, will be disadvantaged compared to higher-income groups who have later careers.

    “Those hit by the reform will be qualified factory workers, less qualified office workers … Senior managers, the intellectual classes who have done long studies, will be less affected,” he said.

    There were other options on the table. In 2020, Macron’s government worked on a more balanced reform, which had the backing of one of France’s main trade unions the CFDT, but was forced to shelve it following months of strikes along with the COVID-19 pandemic which brought the country to a halt.

    France has a long history of showdowns between government-led pension reforms and the public backlash on the street in the form of mass protests and walking off the job. In his second term, Macron has settled for a less aggressive, more topical reform focused on raising the legal age of retirement in the hope that it would be easier to pass through parliament. The breadth of Thursday’s protests will be a first test of that choice.

    [ad_2]

    Clea Caulcutt

    Source link

  • Unloved at home, Emmanuel Macron wants to get ‘intimate’ with the world

    Unloved at home, Emmanuel Macron wants to get ‘intimate’ with the world

    [ad_1]

    Press play to listen to this article

    Voiced by artificial intelligence.

    PARIS — When French President Emmanuel Macron’s party lost its absolute majority in parliament six months ago, many wondered what the setback would mean for an ambitious, here-to-disrupt-the-status-quo leader whose first term was defined by a top-down style of management.

    It turns out Macron 2.0 is a man about globe, pitching “strategic intimacy” to world leaders, as he leaves domestic politics to his chief lieutenant and concentrates on his preferred sphere: international diplomacy.

    The Frenchman’s past “intimate” moves have been well-documented: affectionate hugging with Angela Merkel, knuckle-crunching handshakes with Donald Trump, and serial bromancing with the likes of Justin Trudeau and Rishi Sunak. Now in his second term, the French president appears to be making a move on — quite literally — the world.

    Since his reelection, Macron has been hopping from one official visit to another: in Algeria one day to restore relations with a former colony, in Bangkok another to woo Asian nations, and in Washington most recently to shore up the relationship with Washington. The globetrotting head of state has drawn criticism in the French press that he is deserting the home front.

    “He is everywhere, follows everything, but he’s mostly elsewhere,” quipped a French minister speaking anonymously.

    “[But] he’s been on the job for five years now, does he really need to follow the minutiae of every project? And the international pressure is very strong. Nothing is going well in the world,” the minister added.

    Before COVID-19 struck, Macron’s first term was marked by a brisk schedule of reforms, including a liberalization of the job market aimed at making France more competitive. The French president was hoping to continue in the same pragmatic vein during his second term, focusing on industrial policy and reforming France’s pensions system. While he hasn’t abandoned these goals, the failure to win a parliamentary majority in June has forced him to slow down on the domestic agenda.

    Foreign policy in France has always been the guarded remit of the president, but Macron is trying to flip political necessity into opportunity, delegating the tedium and messiness of French parliamentary politics to his Prime Minister Elisabeth Borne.

    There are few areas of global diplomacy where the president hasn’t pitched a French initiative in recent months — whether it’s food security in Africa, multilateralism in Asia or boosting civilian resilience in Ukraine. Despite some foreign policy missteps in his first term including the backing of strongman Khalifa Haftar in the Libyan civil war, Macron is now a veteran statesman, eagerly taking advantage of Europe’s leaderless landscape to hog the international stage.

    The French president’s full pivot to global diplomacy in his weakened second term at home is reminiscent of past leaders confronting turmoil on the domestic front.

    “The Jupiterian period is over. He’s got no majority,” said Cyrille Bret, researcher for the Jacques Delors Institute. “So now he is suffering from the Clinton-second-mandate-syndrome, who after the impeachment attempts over the Lewinsky [inquiry], turned to the international scene, trying to resolve issues in the Balkans, the Middle East and in China.”

    But even as Macron embraces the wide world, the pitfalls ahead are numerous. Photo ops with world leaders haven’t done much to slow the erosion of his approval ratings at home. With a recession looming in Europe and discontent over inflation and energy woes, Macron’s margins of maneuver are limited, and trouble at home might ultimately need his attention.

    Man about globe

    The French president first used the words “strategic intimacy” in October, when he told European leaders gathered in Prague they needed to work on “a strategic conversation” to overcome divisions and start new projects.

    If the thought of 44 European leaders cozying up wasn’t bewildering enough, Macron double-downed this month and called for “more strategic intimacy” with the U.S.

    It’s not entirely clear what kind of transatlantic liaison he was gunning for, but it certainly included a good dose of tough love. Arriving in Washington, Macron called an American multi-billion package of green subsidies “super aggressive.” (He nonetheless received red carpet treatment at the White House, with Joe Biden calling him “his friend” and even “his closer” — the man who helps him bring deals over the finish line — even if he didn’t actually obtain any concessions from the U.S. president.) 

    Some of Macron’s success in taking center stage is, of course, due to France’s historical assets: a permanent seat on the U.N. Security Council, a nuclear capacity, a history of military interventions and global diplomacy.

    But for the Americans, Macron is also the last dancing partner left in a fast-emptying ballroom across the pond. The U.K. is still embroiled in its own internal affairs and has lost some influence after Brexit, while German Chancellor Olaf Scholz hasn’t filled the space left by Merkel’s departure.

    While Macron’s abstract and at times convoluted speeches may not be to everyone’s liking, at least he has got something to say.

    “[The Americans] are looking for someone to engage with and there’s a lack of alternatives,” said Sophia Besch, European affairs expert at Carnegie Endowment for International Peace in Washington. “Macron is the last one standing. There’s his enthusiasm, and at the same time he is disruptive for a leader and not always an easy partner.”

    “He can count on some reluctant admirers in Washington for his energy,” she said.

    The French touch

    In his diplomatic endeavors, Macron likes a good surprise.

    “Emmanuel Macron doesn’t like working bottom-up, where the political link is lost,” said one French diplomat. “He enjoys surprising people and marking political coups.”

    “The [French bureaucracy] doesn’t really like that,” the diplomat added. “We prefer things that are all neat and tidy.”

    Conjuring up new ideas — such as the European Political Community — that haven’t quite filtered through the layers of bureaucracy is one of Macron’s ways of pushing the envelope. The newly christened group’s first summit was ultimately hailed as a success, having marked the return of the U.K. to a European forum and displaying the Continent’s unity in the face of Russia’s aggression against Ukraine.

    It’s a technique that forces the hand of other participants but sometimes undermines the credibility of his initiatives, and raises questions about what has really been confirmed. Launching the European Political Community may have been a success; announcing a summit between Russian President Vladimir Putin and the U.S. president a couple of days before the full-scale invasion of Ukraine less so. (The summit, obviously, never took place.)

    Macron’s diplomatic frenzy has also raised speculation that he is already gunning for a top international job for when he leaves the Elysée palace. Macron cannot run for a third term, and speculation is already running high in France on what the hyperactive president will do next.

    The question at the heart of Macron’s second term is whether his attempts to be everything and everywhere — combined with his stubborn dedication to controversial ideas — is what will ultimately trip him up.

    Even as Macron’s U.S. visit was hailed a success, with him saying France and the US were “fully aligned” on Russia, he sparked controversy on his return when he told a French TV channel that Russia should be offered “security guarantees” in the event of negotiations on ending the war in Ukraine.

    “That comment fell out of the line in relation to the coordinated message from Macron and Biden, which was that nothing should be done about Ukraine without Ukraine’s [approval],” said Besch.

    Macron says he wants France to be an “exemplary” NATO member, but he still wants France to act as a “balancing power” that does not completely close the door on Russia. It’s a stance that may help France build partnerships with more neutral states across the world, but it does nothing to mend the rift with eastern EU member states.

    For the man about globe who presents himself as the champion of European interests, that’s an uncomfortable place to be in.

    When it comes to “strategic intimacy,” it’s possible to have too many partners.

    Elisa Bertholomey and Eddy Wax contributed to reporting.

    [ad_2]

    Clea Caulcutt

    Source link

  • World population at 8 billion — by the numbers

    World population at 8 billion — by the numbers

    [ad_1]

    It’s getting crowded in here.

    Last month, the global population reached 8 billion for the first time, according to the United Nations. While the number of humans on the planet is expected to keep growing — peaking at around 10.4 billion by the end of the century — its demographic profile is changing. Fertility rates are gradually decreasing and several countries — most of them in Europe and Southeast Asia — will experience population declines in the next 30 years.

    Thanks to better health care and improving economic conditions, people across the planet now live longer and healthier lives, though significant regional inequalities still exist.

    Greater life expectancy, combined with lower fertility rates, also means that the world’s population is aging. The old-age dependency ratio — the number of people over 65 as a share of the working-age population — is projected to double in the next 30 years. This means the working-age population will need to sustain a growing number of retired people — a big challenge for social security, pension and health care systems.

    [ad_2]

    Giovanna Coi

    Source link

  • ‘Beaten by a lettuce’: 44 glorious days of Liz Truss

    ‘Beaten by a lettuce’: 44 glorious days of Liz Truss

    [ad_1]

    Press play to listen to this article

    LONDON — Westminster is in turmoil, the U.K. economy is floundering, and Tory MPs are about to pick their fifth prime minister in just over six years.

    But in a sign of total normality in this fully-functioning Western democracy, Brits have instead spent much of the past week fixated on a livestream of a head of iceberg lettuce, wearing a wig.

    Set up by tabloid the Daily Star, the paper’s newshounds bet big that a 60p supermarket lettuce would outlast Prime Minister Liz Truss, after her fledgling regime was gripped by unprecedented chaos in its first few weeks.

    And they were right. Truss finally resigned Thursday, just 44 days into the job, making her the U.K.’s shortest-serving prime minister. The Daily Star broke out the Champagne, declaring: “The Lettuce Outlasted Liz Truss.”

    So how did Truss put her salad days behind her, and why did she wilt under the public gaze?

    Let POLITICO take you on a whirlwind tour of Truss’ 44-day premiership — but be warned, there are more than a few icebergs ahead.

    Smashing the orthodoxy

    September 6: It all started so well. After seeing off suave-but-dull rival Rishi Sunak in a rancorous Conservative leadership contest, Truss looked triumphant as she took the reins at No. 10 Downing Street and vowed to “transform Britain into an aspiration nation.” She had good reason to be cheerful, too, vacuuming up support from thousands of grassroots Tory members, getting the key Conservative-backing newspapers on side, and confidently brushing off the fact that the majority of her own Tory MPs had doubts about her competence. What did they know, after all? They’d only worked with Truss in Westminster for the past decade.

    September 8: Upon taking office, Truss picked her close friend and neighbor Kwasi Kwarteng as her top finance minister, and immediately tasked him with taking on the stale “orthodoxy” at the Treasury. In a savvy first move, Kwarteng immediately sacked the most senior civil servant in the ministry — a man so clever his name is literally Tom Scholar — and so ensured that outmoded, orthodox qualities like “experience,” “credibility” and “economic literacy” were expunged at just the right time … amid a global economic crisis.

    Also September 8: A busy day this one, what with Britain’s longest-reigning monarch dying that same afternoon. As the country mourned Queen Elizabeth II, Truss faced her first big communications test on the job: How to capture the nation’s deep sense of grief? She duly rose to the occasion, ripping up lines painstakingly prepared by career officials to deliver a heartfelt tribute with all the enthusiasm of a Q4 sales report. The country wept, for at least one Liz.

    September 23: The queen’s death put normal politics on ice for a couple of weeks. But the pause allowed Team Truss to put the finishing touches on their very own Mona Lisa: the mini-budget. A sleeker, more aerodynamic budget than the normal kind, this mini version did away with tired conventions like “independent fiscal scrutiny by the government’s own watchdog,” and “making the sums add up.” Instead, Truss and Kwarteng pressed ahead with debt-funded tax cuts and a multi-billion pound plan to subsidize energy bills. Kwarteng also showed he retained a populist touch with crowd-pleasing measures such as cutting taxes for the U.K.’s super-rich and removing a cap on bankers’ bonuses, all in the middle of a cost-of-living crisis — before heading off to a Champagne reception with hedge fund bosses to party the night away. Cheers!

    Woke markets cancel Truss

    September 26: Eek. Then came the backlash. Financial markets — famously stuffed with tofu-munching lefties who hate conservatism and everything it stands for — failed to understand the mini-budget’s genius, while the unruly pound, which probably voted to Remain in the EU, crashed to its lowest-ever level against the U.S. dollar. Kwarteng, sounding a little shaken, promised he would publish all his fully-worked-out sums in, oooh, November? That sound OK?

    September 28: The pound’s reign of terror continued, and, as U.K. borrowing costs soared and British pension funds teetered on the brink of collapse, those radical communists at the Bank of England were forced to step in with an unprecedented emergency bond-buying program “to restore market functioning.” Their hippie best mates at the International Monetary Fund also got in on the act, saying Kwarteng’s plans would “likely increase inequality” and urging the government to “re-evaluate” its tax measures. Chill out, guys!

    Prime Minister Liz Truss is seen returning to Downing Street | Rob Pinney/Getty Images

    October 3: Phew — she made it through to the Tory party conference. Political party conferences, after all, are normally a glorious victory lap for newly-crowned leaders, but Truss again decided to smash the status quo by turning hers into a deeply embarrassing few days of U-turns, backpedaling and noisy Tory infighting. Less than 24 hours after insisting she was sticking by her economic plan, Truss suddenly junked her centerpiece proposal to cut taxes for the rich. Kwarteng admitted the idea had “become a distraction” from the government’s “overriding mission.”

    October 4: Indeed, the U-turn allowed the real “overriding mission” of the government — to needlessly piss off its own MPs — to shine through. No sooner had the tax cut been ditched than Truss’ ever-loyal Cabinet ministers were onto their next target, publicly pressuring the PM not to impose a real-terms cut to social security payments. One minister even capped off the day by telling a room full of drunk communications professionals that the government’s own comms strategy was “shit.” And who could argue?

    October 10-11: A week after ditching their flagship policy, Truss’ government had another go at calming the still-spooked markets. Kwarteng’s new idea? Bringing forward the publication of his next fiscal plan to a date in no way guaranteed to be, erm, spooky: October 31. The Bank of England loved the cut of his jib, again stepping in with a major market intervention to prevent what it called a “fire sale” of U.K. government bonds. Which sounded worrying.

    Actually, we really love the orthodoxy, please come back

    October 14: After weeks of economic turmoil, Kwarteng was dragged home from a trip to Washington D.C. so that he could be sacked on the spot while still jet-lagged — a bad day at the office by anyone’s standards. Finally free of a chancellor who had repeatedly defied her by *checks notes* implementing her exact policy wishes to the letter, the PM then ripped up her long-standing pledge to ease taxes on big business, admitting in an epic eight-minute-long press conference that she’d gone “further and faster than markets were expecting.” We’ve all been there. Reaching out to the center of the Tory party, Truss appointed former Health Secretary Jeremy Hunt as her new chancellor, shoring up her faltering premiership for a full 36 hours.

    October 16: Team Truss’ strenuous efforts to build bridges with her now-mutinous party ramped up another notch over the weekend, as a No. 10 insider branded her former leadership rival and ex-Cabinet colleague Sajid Javid — who had reportedly just been sounded out by Truss’ team itself about the chancellor job — “shit.” It didn’t go down too well with him, or his mates.

    October 17: A biggie, as Hunt put a bullet in the entire Truss agenda, live on TV. In an astonishing move, the new finance minister issued a televised statement in which — by his own admission — he ripped up “almost all” the mini-budget pledges the Truss government had announced just a few weeks earlier. Even the energy support plan, clung to by Truss supporters as one of the few remaining positives of her premiership, was to be significantly pared back — although hard-pressed voters should be able to warm themselves this winter by standing near the giant “dumpster fire” that’s been Westminster the past six years. Truss capped another glorious day by avoiding an urgent question in the House of Commons and sending a junior Cabinet minister to reassure angry MPs that the British prime minister was not, in fact, “hiding under a desk.”

    October 19: Very much the End Times. A rollercoaster of a day — if rollercoasters only went downhill — as an under-pressure Truss first offered up yet another U-turn, this time on pension payments; then a senior Truss aide was suspended as that clever “shit” quote to the Sunday newspapers got investigated by No. 10; then her home secretary was sacked and posted what was essentially an extended anti-Truss sub-tweet as a resignation letter; and then the government somehow turned a really boring House of Commons vote into a bitter row about “manhandling” its own MPs, as one of them literally cried on live TV. For those watching from abroad — this is why people in the U.K. drink a lot.

    October 20: With the game finally up and her authority shot to pieces, Truss bowed to the inevitable and resigned Thursday, reeling off all her achievements in an 89-second statement on the Downing Street steps. Yet all is not lost. Tucked away in a newsroom in London, there’s one little lettuce who never lost hope. And in its still-crisp and delicious center lies the promise of national renewal. We can but dream.

    This article was updated to correct a date.

    [ad_2]

    Matt Honeycombe-Foster

    Source link

  • Truss’ jittery Tories blame Bank chief over market meltdown

    Truss’ jittery Tories blame Bank chief over market meltdown

    [ad_1]

    Press play to listen to this article

    As Britain’s central bank boss, tasked with managing inflation and setting interest rates, Andrew Bailey likes targets. Now he is one.

    Markets are dumping U.K. assets amid chaotic policymaking from Liz Truss’ new government — but Bailey’s rocky stewardship of the Bank of England is getting a growing share of the blame. His harshest critics include some of Truss’ most senior Conservative Party colleagues.

    At stake are home loans for 2 million households coming due for renewal amid cripplingly high interest rates in the next two years and the viability of pension funds managing more than £1 trillion worth of assets. Failure to quell a “fire sale” of U.K. bonds and currency risks a financial meltdown that could spread far beyond British shores.

    The current bond market pressure began after U.K. Chancellor Kwasi Kwarteng announced a vast package of unfunded tax cuts, stoking investors’ fears about the long-term sustainability of the government’s debt. 

    The dramatic selloff of government bonds sparked a panic at U.K. pension funds, which couldn’t handle the price falls, and has huge knock-on impacts for mortgage rates and borrowing costs.

    The political fallout has so far landed on Truss’ government’s shoulders — prompting U-turns on key policies as opinion polls showed cratering support.

    Yet before the U.K.’s self-inflicted turmoil, Bailey was feeling political pressure over the central bank’s handling of double-digit inflation and the rising cost of living that comes with it. 

    While No. 10 refuses to be drawn on the Bank’s decisions, Business Secretary Jacob Rees-Mogg suggested a failure to raise interest rates quickly was at the root of the turmoil in financial markets.

    He dismissed it as “commentary” to draw a direct link between the government’s mini-budget and concerns over the U.K.’s financial stability that led to emergency intervention from the Bank, adding that pension funds’ “high-risk” activities had played a role.

    “It could just as easily be the fact that the day before, the Bank of England did not raise interest rates by as much as the Federal Reserve did,” he told the BBC’s Today program. 

    In another apparent swipe at the Bank, Rees-Mogg added: “The pound and other currencies have been falling against the dollar because interest rates in the U.S. have been rising faster than they have in other markets.”

    In the immediate aftermath of Kwarteng’s disastrous mini-budget, the Bank seemed to be in command of the situation when it stepped in to calm the pension fund crisis and refused to be pushed into an early interest rate rise by markets. But two further interventions this week and confusion over stark comments from Bailey himself risk undermining that impression.

    The governor on Tuesday issued a rare ultimatum to beleaguered pension funds struggling to meet cash calls in the government bond market. “You’ve got three days left now. You’ve got to get this done,” he warned at an event in Washington.

    The bank has effectively bailed out pension funds since the U.K. government’s mini-budget roiled the markets. The bond-buying intervention is intended to offer temporary relief and give the affected funds time to raise enough cash to handle historic surges in yields.

    Bailey’s message appeared to be aimed at upping the pressure on funds to sell assets in time rather than expecting an extension beyond Friday’s deadline. “We will be out by the end of this week,” he said.

    Yet the remarks seemed to backfire instantly, sparking a sharp fall in the pound, although it has since recovered.

    U.K. government borrowing costs also increased again on Wednesday, with the yield on 30-year gilts moving above 5 percent — the level that first sparked the bank’s intervention — before dropping back after the Bank used its firepower to buy £4.4 billion of gilts.

    Financial market experts think the governor’s comments were a mistake that will force the bank into following the government’s recent U-turns. 

    Mike Howell of CrossBorder Capital described Bailey’s words as the “shortest suicide note in history,” and said the governor will have to change course. 

    “Andrew Bailey’s insistence that emergency support will end on Friday is an unsustainable position that we expect to be reversed quickly,” said Oxford Economics chief economist Innes McFee.

    If the Bank loses credibility, its ability to rescue the economy from market disruption will be severely hampered. Increasingly costly interventions will yield ever more limited results if investors lose faith in the U.K.’s most important financial institution.

    Before Bailey’s comments on Tuesday, one markets strategist said the Bank could “test the water” by stopping the program on Friday and then restarting if necessary — but that would be risky because it’s unclear how much yields would have to rise before triggering the same problems at pension funds.

    “While a very able central banker, he has spent most of his career outside the BoE’s monetary policy and markets areas,” said EFG Bank chief economist Stefan Gerlach, previously a central banker himself.

    “He is not the best fit for the job, given the nature of the problems the Bank is facing now. His communications missteps over the last year were damaging,” he said, pointing to Bailey’s confusing guidance on interest rates. “It’s like the fire brigade saying ‘you have to have your fire before Friday because then we are heading home.’”

    This article is part of POLITICO Pro

    The one-stop-shop solution for policy professionals fusing the depth of POLITICO journalism with the power of technology


    Exclusive, breaking scoops and insights


    Customized policy intelligence platform


    A high-level public affairs network

    [ad_2]

    Hannah Brenton, Johanna Treeck and Esther Webber

    Source link

  • Liz Truss panics as markets keep plunging

    Liz Truss panics as markets keep plunging

    [ad_1]

    Press play to listen to this article

    LONDON — Try as she might, Liz Truss just can’t calm the markets.

    Despite reversing her plan to cut tax for the highest earners, bringing forward a more detailed budget statement by almost a month and halting the appointment of a controversial senior civil servant to oversee the Treasury, the Bank of England was again forced to step in to try to stabilize market turbulence. 

    Insiders pointed to the surprise appointment of James Bowler to the Treasury top job, passing over Antonia Romeo, who it was widely briefed had got the role, as a sign of No. 10’s anxiety.

    “The PM is panicking and reaching for almost anything that she can do to calm the situation. She was so burnt by the fallout from mini-budget that anything that seemed bold, she now wants to massively trim back,” said a senior Whitehall official.

    Treasury officials say that Chancellor Kwasi Kwarteng’s tone in the past week has become markedly more conciliatory as he tries to steady the buffs. 

    But in spite of these U-turns, the current market unease may be out of the government’s hands. 

    The so-called mini budget came at a particularly fragile time for the economy, caused by high inflation and the Bank of England’s attempts to end a policy that saw it buy up huge quantities of government debt, originally an attempt to stabilize the economy in the wake of the 2008 financial crisis.

    Kwarteng’s tax cuts, presented without any detail about how they would be funded, spooked the markets, triggering a crisis at U.K. pension funds because the huge spike in yields forced them to bonds — but that then forced prices down further.

    The Bank of England intervened with a £65 billion check book to give pension funds more time to raise cash and stop the so-called doom loop taking hold. Governor Andrew Bailey said Tuesday the Bank’s emergency support will definitely end Friday, prompting fears this may not be enough time.

    The resulting crisis leaves Britain’s new prime minister with an intensifying political problem, as support ebbs away the longer it takes to tame the markets. 

    Jill Rutter, senior fellow at the Institute for Government and former Treasury official, said: “Paradoxically, having said they were the people to take on the Treasury orthodoxy, they are now walking on such thin ice that they are complete prisoners of the most orthodox orthodoxy.”

    Staying alive

    The race is now on for Kwarteng and his Treasury team to come up with a way to restore credibility by the end of October, when he is due to explain how the tax cuts will be paid for. 

    “It’s really difficult to see how you can have a vaguely deliverable plan to bring that back under control,” said the IfG’s Rutter, who pointed out that trying to find money from one-off events such as asset sales would not help the underlying fiscal position. 

    “If you’ve still got a pension fund problem with collateral issues, what [the government] give you on the 31st will probably not be that relevant, because you’ll still be dealing with a bigger problem,” said one markets strategist, speaking of condition of anonymity.

    “If you as a government have somewhat stabilized [pension funds] … the currency is going to react based on how [the market] views the overall fiscal long-term sustainability.”

    But the government’s dented reputation will be hard to rebuild. “If the root cause is fiscal policy, then the issue probably isn’t going to go away until the markets’ concerns over fiscal policy have eased,” said Paul Dales, chief UK economist at Capital Economics.

    “That makes the chancellor’s medium-term fiscal plan on 31 October a very big event for the gilt market, the pound and the Bank of England. Our feeling is that the chancellor will have to work very hard indeed to convince the markets that his fiscal plans are sustainable.”

    Ministers originally said their plan for £43 billion in tax cuts would be funded by borrowing and economic growth, but experts now warn it will require reductions in public spending. 

    The Institute for Fiscal Studies think tank predicted the chancellor would need to spend £60 billion less by 2026-2027, while the International Monetary Fund released a report calculating that high prices will last longer in the U.K. than many other major economies..

    Ahead of the mini-budget, the Resolution Foundation’s Torsten Bell spelled out why this could have a lasting effect. “The big picture in a world where interest rates are rising and inflation is high, is that you don’t want to be seen as the one country that everyone decides is a bad bet.”

    “Showing how serious you are is important,” he added. “If we are really arguing that our growth strategy is to borrow lots more and then that will pay for itself then they [the markets] don’t believe that.”

    One government official speculated that in order to fill the hole in public finances and make the numbers add up Truss and Kwarteng would be forced to U-turn on further aspects of their mini-budget, such as the decision to cancel a planned corporation tax rise. 

    In the meantime, it’s not just the markets that remain unconvinced by Truss’ and Kwarteng’s approach. 

    At the chancellor’s debut session of Treasury questions in the Commons Tuesday, senior Tory MPs queued up to openly cast aspersion on his strategy. 

    Former Cabinet minister Julian Smith asked for reassurance that tax cuts “will not be balanced on the backs of the poorest people in the country” — normally an attack line reserved for opposition MPs. 

    Treasury committee Chairman Mel Stride warned that if Kwarteng did not seek buy-in from fellow MPs on the next fiscal statement it would upset the markets again.

    The PM’s spokesman reiterated Tuesday that Truss is “committed to the growth measures set out by the chancellor” and “the fundamentals of the U.K. economy remain strong.”

    While that statement continues to be tested, so will the position of the prime minister and her chancellor. 

    Annabelle Dickson contributed reporting.

    This article is part of POLITICO Pro

    The one-stop-shop solution for policy professionals fusing the depth of POLITICO journalism with the power of technology


    Exclusive, breaking scoops and insights


    Customized policy intelligence platform


    A high-level public affairs network

    [ad_2]

    Esther Webber, Hannah Brenton and Eleni Courea

    Source link

  • How meltdown in a $1 trillion market brought the UK to the brink of a financial crisis | CNN Business

    How meltdown in a $1 trillion market brought the UK to the brink of a financial crisis | CNN Business

    [ad_1]


    London
    CNN Business
     — 

    Pension funds are designed to be dull. Their singular goal — earning enough money to make payouts to retirees — favors cool heads over brash risk takers.

    But as markets in the United Kingdom went haywire last week, hundreds of British pension fund managers found themselves at the center of a crisis that forced the Bank of England to step in to restore stability and avert a broader financial meltdown.

    All it took was one big shock. Following finance minister Kwasi Kwarteng’s announcement on Friday, Sept. 23 of plans to ramp up borrowing to pay for tax cuts, investors dumped the pound and UK government bonds, sending yields on some of that debt soaring at the fastest rate on record.

    The scale of the tumult put enormous pressure on many pension funds by upending an investing strategy that involves the use of derivatives to hedge their bets.

    As the price of government bonds crashed, the funds were asked to pony up billions of pounds in collateral. In a scramble for cash, investment managers were forced to sell whatever they could — including, in some cases, more government bonds. That sent yields even higher, sparking another wave of collateral calls.

    “It started to feed itself,” said Ben Gold, head of investment at XPS Pensions Group, a UK pensions consultancy. “Everyone was looking to sell and there was no buyer.”

    The Bank of England went into crisis mode. After working through the night of Tuesday, Sept. 27, it stepped into the market the next day with a pledge to buy up to £65 billion ($73 billion) in bonds if needed. That stopped the bleeding and averted what the central bank later told lawmakers was its worst fear: a “self-reinforcing spiral” and “widespread financial instability.”

    In a letter to the head of the UK Parliament’s Treasury Committee this week, the Bank of England said that if it hadn’t interceded, a number of funds would have defaulted, amplifying the strain on the financial system. It said its intervention was essential to “restore core market functioning.”

    Pension funds are now racing to raise money to refill their coffers. Yet there are questions about whether they can find their footing before the Bank of England’s emergency bond-buying is due to end on Oct. 14. And for a wider range of investors, the near-miss is a wake-up call.

    For the first time in decades, interest rates are rising quickly around the world. In that climate, markets are prone to accidents.

    “What the previous two weeks have told you is there can be a lot more volatility in markets,” said Barry Kenneth, chief investment officer at the Pension Protection Fund, which manages pensions for employees of UK companies that become insolvent. “It’s easy to invest when everything’s going up. It’s a lot more difficult to invest when you’re trying to catch a falling knife, or you’ve got to readjust to a new environment.”

    The first signs of trouble appeared among fund managers who focus on so-called “liability-driven investment,” or LDI, for pensions. Gold said he started to receive messages from worried clients over the weekend of Sept. 24-25.

    LDI is built on a straightforward premise: Pensions need enough money to pay what they owe retirees well into the future. To plan for payouts in 30 or 50 years, they buy long-dated bonds, while purchasing derivatives to hedge these bets. In the process, they have to put up collateral. If bond yields rise sharply, they are asked to put up even more collateral in what’s known as a “margin call.” This obscure corner of the market has grown rapidly in recent years, reaching a valuation of more £1 trillion ($1.1 trillion), according to the Bank of England.

    When bond yields rise slowly over time, it’s not a problem for pensions deploying LDI strategies, and actually helps their finances. But if bond yields shoot up very quickly, it’s a recipe for trouble. According to the Bank of England, the move in bond yields before it intervened was “unprecedented.” The four-day move in 30-year UK government bonds was more than twice what was seen during the highest-stress period of the pandemic.

    “The sharpness and the viciousness of the move is what really caught people out,” Kenneth said.

    The margin calls came in — and kept coming. The Pension Protection Fund said it faced a £1.6 billion call for cash. It was able to pay without dumping assets, but others were caught off guard, and were forced into a fire sale of government bonds, corporate debt and stocks to raise money. Gold estimated that at least half of the 400 pension programs that XPS advises faced collateral calls, and that across the industry, funds are now looking to fill a hole of between £100 billion and £150 billion.

    “When you push such large moves through the financial system, it makes sense that something would break,” said Rohan Khanna, a strategist at UBS.

    When market dysfunction sparks a chain reaction, it’s not just scary for investors. The Bank of England made clear in its letter that the bond market rout “may have led to an excessive and sudden tightening of financing conditions for the real economy” as borrowing costs skyrocketed. For many businesses and mortgage holders, they already have.

    So far, the Bank of England has only bought £3.8 billion in bonds, far less than it could have purchased. Still, the effort has sent a strong signal. Yields on longer-term bonds have dropped sharply, giving pension funds time to recoup — though they’ve recently started to rise again.

    “What the Bank of England has done is bought time for some of my peers out there,” Kenneth said.

    Still, Kenneth is concerned that if the program ends next week as scheduled, the task won’t be complete given the complexity of many pension funds. Daniela Russell, head of UK rates strategy at HSBC, warned in a recent note to clients that there’s a risk of a “cliff-edge,” especially since the Bank of England is moving ahead with previous plans to start selling bonds it bought during the pandemic at the end of the month.

    “It might be hoped that the precedent of BoE intervention continues to provide a backstop beyond this date, but this may not be sufficient to prevent a renewed vigorous sell-off in long-dated gilts,” she wrote.

    As central banks jack up interest rates at the fastest clip in decades, investors are nervous about the implications for their portfolios and for the economy. They’re holding more cash, which makes it harder to execute trades and can exacerbate jarring price moves.

    That makes a surprise event more likely to cause massive disruption, and the specter of the next shocker looms. Will it be a rough batch of economic data? Trouble at a global bank? Another political misstep in the United Kingdom?

    Gold said the pension industry as a whole is better prepared now, though he concedes it would be “naive” to think there couldn’t be another bout of instability.

    “You would need to see yields rise more quickly than we saw this time,” he said, noting the larger buffers funds are now amassing. “It would require something of absolutely historic proportions for that not to be enough, but you never know.”

    [ad_2]

    Source link