- President Nicolas Sarkozy ousted by socialist candidate Francois Hollande
- Meanwhile in Greece, voters reject policies of tough financial discipline
- Analysts warns results could tip single currency into collapse within months
PUBLISHED: 13:02 EST, 6 May 2012 | UPDATED: 16:47 EST, 6 May 2012
Europe was plunged into fresh economic chaos last night as France rejected austerity and elected a tax-and-spend socialist president.
Nicolas Sarkozy suffered a humiliating defeat at the hands of Francois Hollande, who ran on a platform of tearing up last December’s controversial deal to save the euro from oblivion.
The inexperienced Mr Hollande is now seeking talks with the European Central Bank and German Chancellor Angela Merkel to demand further borrowing to boost growth.
All change: French president Nicolas Sarkozy (left) has been ousted by Socialist Party rival Francois Hollande (right) in a result that is being held as a rejection of austerity measures imposed amid the eurozone crisis
The menace to the single currency was compounded when voters in near-bankrupt Greece also rejected plans to impose tough financial discipline.
The far Right looked set to grab its first seats, saying: ‘The day of national revolution has begun against those who are selling us out and looting the sweat of the Greek people.’
City analysts said that while stock markets had expected a Hollande win, the results in Paris and Athens could tip the strained eurozone back into turmoil.
Mr Hollande claimed that many voters in Europe would greet his election with relief.
‘Europe is watching us, austerity can no longer be the only option,’ he said.
Struggling to contain his emotions, Mr Sarkozy said: ‘I did my best to protect the French people during the events of the past five years, so that France could come out stronger from this crisis.’
He finished: ‘You are the eternal France, I love you.’
Bitter defeat: A UMP supporter sobs while another covers his face with the French flag as the results are announced at the party headquarters in Paris
He is the 11th European leader to be swept from office since the start of the economic crisis in 2008.
On a day of high drama:
- Mr Hollande defeated Mr Sarkozy by 52 per cent to 48 in only the second time a sitting French President has failed to win a second term;
- Greece’s conservative New Democracy and socialist PASOK parties risked falling short of the 151-seat majority needed to form a coalition government;
- Financial experts warned that the Euro could collapse within months;
- British officials admitted that David Cameron made a serious error by ostentatiously backing Mr Sarkozy’s re-election bid.
The uncharismatic Mr Hollande, who has never held any ministerial office and is the first socialist to win the French presidency since Francois Mitterrand in 1988, has been an outspoken advocate of rewriting the plans to save the single currency.
He wants a new ‘preamble’ written into the new European fiscal pact signed by 25 EU nations to water down calls for austerity measures.
He is demanding a change to strict rules which dictate how much member states can spend, without which most observers believe a new European economic crisis is inevitable.
After his victory he said that one of his priorities was to ‘preserve our social model’ – a reference to France’s generous welfare state.
The new president has pledged to spend an extra 20billion euros in the years ahead to kickstart the economy and wants to slap a 75 per cent tax rate on those earning more than one million euros a year, or around £850,000.
He says he ‘dislikes the rich’ and has singled out ‘the world of finance’ as his principal enemy. Douglas McWilliams, of the Centre for Economics and Business Research, said that this ‘could be the week that starts the euro break-up’.
He predicted that the ECB might have to lend more money to banks if there is a stock market ‘wobble’ in response to Hollande’s triumph.
‘Each bout of printing money brings the end of the euro nearer,’ he said.
City veteran David Buik, of trading firm BGC Partners, said that France’s affairs paled beside the impact of the Greek election and persistent fears that Spain will be the next European domino to fall.
‘Greece is close to collapse and Spain is deep in a financial quagmire,’ said Mr Buik. ‘I will be very surprised if the Eurozone is not split in 18 months time.’
Last night David Cameron, who snubbed Mr Hollande during a recent visit to the UK, phoned the new president to congratulate him.
A Downing Street spokesman said: ‘They both look forward to working very closely together in the future and building on the very close relationship that already exists between the UK and France.’
Labour leader Ed Miliband, who met Mr Hollande during his London visit, also sent his congratulations.
‘This new leadership is sorely needed as Europe seeks to escape from austerity, and it matters to Britain,’ he said.
‘In his campaign, he has shown that the centre-Left can offer hope and win elections with a vision of a better, more equal and just world.’