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UPDATE 1-French households squirrel away Macron's purchasing power boost

Leigh Thomas

* Government expects household income to rise 2% in 2019

* Households saving rate at highest level since 2012

* Savings rate graphic: https://tmsnrt.rs/2WbZLaV (Adds details, quotes, background)

PARIS, May 29 (Reuters) - Frugal French households are saving extra cash rather than going on a growth-boosting spending splurge after President Emmanuel Macron gave a 15 billion euro boost to their incomes, official data showed on Wednesday.

In the first three months of 2019 households squirreled away the biggest share of their spare cash since 2012, when the raging euro zone debt crisis prompted French savers to ready for a rainy day.

The economy is faring far better now, clocking 0.3% growth in the first quarter despite consumers' caution and weekly protests against Macron's reform drive, data from the INSEE official statistics agency showed.

Macron's government says that household incomes will grow in 2019 by the most in 12 years due to a package of measures to boost purchasing power and appease protesters who don yellow high-visibility vests in weekly demonstrations across France.

Households' disposable income rose 0.9% in the first quarter after Macron's government presented a package of measures in December worth more than 10 billion euros ($11.2 billion) aimed at increasing the poorest workers and pensioners' incomes.

Consumer spending, traditionally the motor of French growth, grew only 0.4% in the first quarter despite those efforts, up marginally from 0.3% in the previous quarter.

Instead of rushing to spend the extra cash, the GDP report shows that households are instead setting it aside. The savings rate rose to 15.3%, the highest level since the third quarter of 2012.

"The propensity to save can be explained by the persisting economic and social uncertainty," said Philippe Crevel, head of the Cercle de l'Epargne think-tank, which studies trends in savings.

"After the deep crisis over the 'yellow vests', households are on their guard and are tending to put off purchases," he said in a research note.

Macron rolled out the package of concessions after protesters ran amok in central Paris, causing some of the worst vandalism and clashes with police in decades.

The protests, which still occur every Saturday though in far smaller numbers, were sparked in November by disgruntlement over the high cost of living and fuel tax hikes that were later scrapped.

Desperate to appease protesters, Macron followed up on the December package of concessions with a pledge last month to cut income tax by a further 5 billion euros.

The extra cash, coming in the form of various tax breaks and bonuses, has released a flood of funds into French households preferred savings product, tax-free regulated savings accounts.

($1 = 0.8953 euros)

(Reporting by Leigh Thomas; Editing by Catherine Evans)

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