Today, President
Nicolas Sarkozy took on his Socialist rival Francois Hollande. Hollande won the
election, taking advantage of Sarkozy’s unpopularity, with 52% of the vote,
against 48% for the centre-right incumbent president. Sarkozy is the first French
President not to be re-elected for a second-term in 31 years, amid a period of
economic doubt, austerity and European bailouts.
The election result
is interesting and, indeed, potentially worrying, as it has wide implications
for the whole Eurozone. Mr Hollande has promised to alter a deal on the debt of
member states, wanting to include measures such as the creation of Eurobonds, a
financial transactions tax and a more aggressive European Central Bank role in encouraging
growth. This may cast a shadow over the relationship between Germany and
France. German Chancellor Angela Merkel had campaigned openly for Sarkozy, who
had been her ally in pushing through policies encompassing the Chancellor’s method
of austerity and deficit-cutting. With the Euro’s two main powerhouses in disagreement,
there are fears that the European Union could be plunged into a new round of
uncertainty. It seems inevitable that ructions will appear, with Germany, the
EU’s paymaster, and Hollande, who stated “it is not for Germany to decide for
the rest of Europe.”
Domestically,
Hollande will attempt to balance France’s budget through higher taxes on big, rich
firms, rather than spending cuts. After the ratings agency Standard and Poor
stripped France of the prestigious AAA rating, many French people are sceptical
that France will be able to generate strong growth. Hollande has also vowed to
scrap Sarkozy's tax-breaks for the rich and to increase taxes for high earners
to finance ‘essential spending’, such as creating 60,000 posts in France's
under-performing school system. This could end badly for France, driving out
rich businesspeople that are essential for creating jobs and growth.
Although Britain
is not a member of the single-currency, the government is paying substantial
amounts contributing to the EU bailouts and has adopted an austerity formula at
home that many internally have criticised. If Hollande abandons the austerity
policies in France, it will put further pressure on the debt crisis and Britain
will be adversely affected. Domestic political pressure to abandon the needed
austerity program will increase, and the potential blundering of the EU’s
economic measures may require future British pay-outs.
The turn-out of
the election was high, estimated at around 80%, suggesting the importance of
this election for the French people as well as the international community. The
French and EU economic position seems to be in more doubt with Hollande’s
presidency. His economic policy has been described as a ‘delicate balancing-act’
by the Guardian’s Angelique Chrisafis, needing France to swiftly return to growth
to sustain his Socialist policies.
As Sarkozy
simply said, now “there will be a handover of power. The nation follows its
course. The nation is stronger than the destiny of the men who serve it,"
he said.
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