Short party for Hollande after French election win
PARIS: Francois Hollande’s honeymoon
his election as France’s first centerleft president in 17 years was cut short yesterday by jittery financial markets eager for signals on his policies and how hard he will push back against Germanled austerity.
The Socialist beat conservative Nicolas Sarkozy with 51.7 percent of Sunday’s runoff vote after a bruising campaign dominated by the same anger over economic crisis that has felled 10 other European leaders since late 2009.
After jubilant left-wingers partied in the streets into the early hours in Paris, financial markets stuttered as the victory of antiausterity parties in Greece, more than Hollande’s election, fueled fears about a new chapter in Europe’s crisis.
Hollande, who delivered a victory speech in his rural base of Tulle in central France on Sunday before flying to Paris to address tens of thousands of supporters in historic Bastille square, admitted the festivities would have to be short-lived.
“There is a lot of joy and pride but also apprehension at taking on this responsibility at a difficult time for the country and for Europe,” he said.
“In every capital, beyond the heads of state and government, there are people who have found hope thanks to us, who are looking to us and want to put an end to austerity.” But, his chief economic adviser said, the new team was not coming in to power to “hand out money.”
The new president is expected to be sworn in on May 15. Hollande will travel to Berlin shortly thereafter to challenge Germany’s focus on austerity policies and press new ideas for stimulating growth as fears about the euro zone’s debt crisis resurface following an inconclusive election in Greece.
The French woke up to Hollande, arms outstretched, beaming on the front pages of morning newspapers. Left-leaning daily Liberation ran the headline “Normal!” a reference to the new president’s image as a man of the people.
Arriving at his campaign headquarters in Paris on Monday morning, where he was due to hold discussions on forming a new government, Hollande emphasised that for the next few days at least conservative Nicolas Sarkozy remained in office.
“I must prepare myself. I said that I was ready and now I must make sure I am, completely,” he told reporters.
With anti-austerity parties winning more than half the votes in Greece, the euro tumbled to a three-month low against the dollar; oil and European shares slumped to 4-1/2 month lows. The Paris CAC stocks index slipped 1.5 percent but the risk premium that investors charge for holding French 10-year bonds rather than safe-haven German Bunds was broadly unchanged at 127 basis points. It hit a high of 191 bps last November amid fears of a euro zone credit crunch.
“If (Hollande) really refuses the budgetbalancing rule, if he refuses to balance the books in 2016, there will be pressure from investors who currently trust us,” outgoing conservative Finance Minister Francois Baroin said. Hollande has said he would balance the budget by the end of his fiveyear term.
The left reclaimed Bastille square where revellers had danced the night away in 1981 when Francois Mitterrand became the Socialist Party’s first directly elected president. Three decades later, a new generation of left-wing voters waved red flags. Some carried roses, the party emblem.
Hollande is expected to include some trusted old hands in his government like Mitterrand’s prime minister Laurent Fabius but add many younger faces, notably women. His economic team, led by centerleft former finance minister Michel Sapin, includes politicians, industry leaders and public officials seen as market-friendly.
“The words ‘grace period’ do not apply to the situation. That’s the reality,” Sapin said, adding that the priority would be to launch discussions with France’s European partners.
“Nobody expects that we simply arrive in power and hand out money. That doesn’t correspond to the reality of the situation.” Economists say Hollande must quickly outline his domestic plans, likely to center on a major tax reform, and revise over-optimistic growth targets, which threaten deficit-cutting goals.