Energy crisis in Europe: France will freeze gas prices and reduce taxes on electricity companies

The French Prime Minister, Jean Castexannounced the measures of counter rising gas prices, which may not be subject to further tariff increases after the 12% 6% hike came into effect on Friday, and electricity, whose maximum increase will be 4%. The measure adopted by the Macron government comes six months before the next presidential elections

In an interview on the public channel TF1, Castex justified the control of prices in order to preserve the purchasing power of families. “The increase of 12; 6% will apply, but it will be the last”, said the head of government. The maintenance of the gas price will be in effect until April 2022.

This latest increase has sparked controversy among French consumers. This monthly increase of 12.6% in October will be the most pronounced since 2013. In addition, it will mean an increase of almost 60% since the beginning of the year.

Based on 2019 data, nearly 12% of French households lived in “fuel poverty”, since they spent more than 8% of their salary to pay the energy bills. The main reason for the increase in natural gas, which France imports at 99%, is due to the strain on international energy markets, where demand has increased due to the post-COVID economic recovery.

Regarding electricity for consumers on the regulated market, which is expected to increase by around 10% in February 2022, Castex explained that mechanisms will be put in place to keep the increase at 4%.

“The increase is less than abroad because we produce practically what we consume thanks to nuclear power and renewables”, underlined the Prime Minister. So far, rising energy prices have had little impact on consumers. The system for calculating individual tariffs is very different from that which exists in Spain, where the impact of wholesale prices is much more direct and faster.