French government may pass reform bill by decree

PARIS (Reuters) - The French government said on Tuesday it could pass President Francois Hollande's economic reform bill by decree, removing the risk of it being blocked by a backbench rebellion.

The reform package is needed to persuade the European Commission to give Paris more time to get its public finances into line with EU rules.

A government source said Prime Minister Manuel Valls could use a decree that would allow the law to go through without a vote. Opponents could, however, move to censure the government and seek a vote of no confidence.

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

Several Socialist lawmakers were ready to vote against the bill, threatening its passage.

Valls earlier acknowledged the vote would be "very tight" and urged Socialist lawmakers to back the law, according to a lawmaker who was present at a meeting when Valls spoke.

Nearly all of the center-right UMP opposition party were planning to vote against the law, the leader of the party's parliamentary group said.

The legislation, which responds to longstanding demands by the European Commission that France open up closed professions to boost its stagnant economy, is viewed as too pro-business by these lawmakers on the left of the Socialist party.

It has prompted labor unions to take to the streets in protest, while professions such as notaries, bailiffs and court clerks also oppose deregulation.

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

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

Economists including Societe Generale analyst Michel Martinez have said the bill is a welcome move to cut red tape but "will not change the face of France" and will have limited macroeconomic impact -- which Martinez has put at about 0.5 percent within five to 10 years.

Polls show that while some in the Socialist party and the Greens, previously a partner in government with the Socialists, reject the text, 60 percent of the population back it.

(Additional reporting by Emile Picy and Nicholas Vinocur; Editing by Alexandria Sage and Giles Elgood)