France to limit gas and price growth to 15% next year

Elisabeth Borne, Prime Minister of France. Photo by Stephane Lemouton (Sipa/Scanpix).

France will limit expected increases in natural gas and electricity prices to 15% early next year, extending price controls imposed after Russia’s invasion of Ukraine, Elisabeth Borne, the prime minister, said on Wednesday.

The upper limits of price increases will apply to household consumers and small businesses, and approximately 12 million households with lower incomes will also be paid so-called “energy allowances” ranging from EUR 100 to EUR 200 to help pay heating bills in winter, E. Borne said.

The new measures are less far-reaching than the caps introduced earlier this year, which limited domestic electricity price rises to 4% and fixed gas prices at October 2021 levels – the latter measures have contributed to lower inflation in France than in neighboring European countries.

“We took strong measures very early on to protect the French public. But everyone knows, and we have to say it transparently: these measures cost our public finances”, said E. Borne, justifying the less generous upper limits.

Bruno Le Maire, the finance minister, noted that in total, the government’s price “caps” will unlock $16 billion next year. EUR, of which 11 billion EUR will be allocated to stop the growth of gas prices, and 5 billion Eur – for stopping electricity prices.

According to E. Borne, “only the restriction of energy consumption and European solidarity will allow us to avoid the reduction and rationing of energy use in the worst case, for example, if the winter will be particularly cold and at the same time there will be supply problems”.

However, the Prime Minister added that “in the most likely scenarios, if everyone behaves responsibly <...> there will be no cuts”.

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