(Bloomberg) -- Emmanuel Macron sought to reinvigorate his presidency and placate Yellow Vest protesters with a pledge to combine sticking to economic reforms with a volley of new policies, all couched in poetic language evoking the art of being French.

After almost six months of often violent demonstrations, the 41-year-old president told reporters gathered in a gilded hall at the Elysee Palace that he would set in motion a “new act” for the French Republic with a “project of resistance and ambition.” While pledging not to go back on pro-business overhauls, Macron said he would do more to make his agenda more human and do a better job of protecting the nation’s citizens from globalization.

“I have felt in my bones what French people are going through and I want to provide an answer,’’ Macron said. “The art of being French is being rooted and universal, attached to history and origins but embracing the future.”

The announcements ranged from promises to revamp the mechanics of the French state, to reforms of education, pensions and taxation. Many of the overhauls are already in motion, but did Macron indicate preferences for key parameters. For example, income tax cuts should total around 5 billion euros ($5.6 billion), he said, and French people should be encouraged to work longer with incentives to retire later.

Key Takeaways

  • Macron is sticking to his guns on spending cuts and reforms he has already put in place like changes to labor laws, saying his agenda isn’t the reason that French people are protesting
  • The president is leaving intact key pillars of the country’s economic model like the 35-hour work-week and a minimum retirement age of 62
  • The tax announcements signal a further shift in favor of consumers over businesses as Macron says closing tax breaks for companies will help offset income tax cuts for households
  • There’s also a shift in favor of retired people, who shouldered the burden of tax increases and spending cuts in the first two years of Macron’s presidency
  • The proposed changes to France’s democracy are intended to symbolize a transfer of power away from Paris and perceived elites
  • Macron may struggle to sell his oft-repeated mantra that the French people must work more
  • The president dodges the question of whether he will run for re-election in 2022, saying he “furiously and passionately” focused on making his first time a success

The package is a pivotal moment in the presidency of Macron, who came to power nearly two years ago promising deep reforms to jolt France’s economy and labor market. But those plans have collided with the protests of the Yellow Vest movement, which began with opposition to gasoline taxes before morphing into a general unrest over purchasing power and Macron’s governing style.

His announcements Thursday follow a 10-week national debate devised to assuage the grassroots discontent and come just a month ahead of EU elections that are seen as a referendum on his policies. The president has taken weeks to fine-tune his response as he seeks to safeguard the business-friendly reforms he pushed through at the start of his term while addressing a common perception that French society is becoming less equal.

Key Highlights

  • A greater role for referendums in French democracy and random selection for citizens assemblies
  • Proportional election for around 20 percent of seats in parliament
  • A reform in 2020 of how the state functions to give more power to lower mayors and regional authorities
  • No closures of schools of hospitals without the agreement of mayors
  • Reform of recruitment of top civil servants and elite training school ENA
  • Assess efficacy of abolishing the wealth tax in 2020 and make changes if needed
  • Significant income tax cuts for middle classes financed by closing tax breaks for companies, cutting spending and working more
  • Limit class sizes at primary schools and “revalue” the job of teachers
  • Overhaul of unemployment insurance system summer 2019
  • Index pensions under 2,000 euros a month to inflation from 2020 and all pensions in 2021
  • Present sweeping pension reform summer 2019 to increase trust in the system
  • Open to changing Schengen to exclude states from Europe’s free-circulation zone

To contact the reporters on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net;William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Robert Jameson

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