Au revoir, austerity! New Euro crisis as French vote for return to ruinous spending

http://www.dailymail.co.uk/news/article-2140427/Francois-Hollande-victory-French-presidential-election-spell-disaster-Euro.html

  • 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

By Peter Allen, Tim Shipman and Rob Davies

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.

Nicolas Sarkozy, France's President and UMP party candidate for his re-election, votes in the second round of the 2012 French presidential elections at a polling station in Paris May 6, 2012
Socialist Party (PS) candidate for the 2012 French presidential election, Francois Hollande visits a village in the neighbourhoods of Tulle, southwestern France on May 6, 2012

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

'I take responsibility': France's incumbent president looks sheepish as he appears on stage before UMP supporters in Paris‘I take responsibility’: France’s incumbent president looks sheepish as he appears on stage before UMP supporters in Paris

Man of the moment: A grinning Francois Hollande greets supporters as he arrives to give his acceptance speech in his political heartland of Tulle, southwestern FranceMan of the moment: A grinning Francois Hollande greets supporters as he arrives to give his acceptance speech in his political heartland of Tulle, southwestern France

Triumphant: France's president-elect waves to supporters in Tulle before a speech in which he called for unity among a divided French electorateTriumphant: France’s president-elect waves to supporters in Tulle before a speech in which he called for unity among a divided French electorate

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.’

Jubilation: Key members of Mr Hollande's campaign team celebrate the result inside the Socialist Party's headquarters Jubilation: Key members of Mr Hollande’s campaign team celebrate the result alongside crowds of supporters inside the Socialist Party’s headquarters

The winning side: From left, National Secretary for communication David Assouline, party spokesman Benoit Hamon, campaign policy advisor Aurelie Filippetti and political advisor Harlem Desir amid an ecstatic crowd at the Socialist Party HQThe winning side: From left, National Secretary for communication David Assouline, party spokesman Benoit Hamon, campaign policy advisor Aurelie Filippetti and political advisor Harlem Desir amid an ecstatic crowd at the Socialist Party HQ

And the losers: A distraught supporter of Sarkozy's UMP party reacts to the early results at the Mutualite meeting hall in ParisAnd the losers: A distraught supporter of Sarkozy’s UMP party reacts to the early results at the Mutualite meeting hall in Paris

Crestfallen: Two young Sarkozy supporters look on as the first results from the second-round elections arrive in ParisCrestfallen: Two young Sarkozy supporters look on as the first results from the second-round elections arrive in Paris

A supporter of outgoing French President Nicolas Sarkozy's Union for a Popular Movement (UMP) cries as the preliminary results of the second round of the presidential elections were announced at UMP headquarters in Paris
A supporter of outgoing French President Nicolas Sarkozy's Union for a Popular Movement (UMP) covers his face with the national flag as the preliminary results of the second round of the presidential elections were announced at UMP headquarters in Paris

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.

Putting a brave face on it: Sarkozy arrives to address his supporters after the result reaches crowds at La Mutualite hall in ParisPutting a brave face on it: Sarkozy arrives to address his supporters after the result reaches crowds at La Mutualite hall in Paris

Hero of the left: A victorious Hollande on stage in Tulle with his partner Valerie TrierweilerHero of the left: A victorious Hollande on stage in Tulle with his partner Valerie Trierweiler

Victorious: The face of the newly-elected French President appears on a giant screen at the local Socialist party headquarters in StrasbourgVictorious: The face of the newly-elected French President appears on a giant screen at the local Socialist party headquarters in Strasbourg

Bottoms up: A young Socialist supporter celebrates the party's win with a drink on the streets of ParisBottoms up: A young Socialist supporter celebrates the party’s win with a drink on the streets of Paris

 

Socialists on top: Elated Hollande supporters climb on a bus stop in ParisSocialists on top: Elated Hollande supporters climb on a bus stop in Paris

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.’

Face of a new France: A boy wears a rubber mask of Hollande's face during celebrations in TulleFace of a new France: A boy wears a rubber mask of Hollande’s face during celebrations in Tulle

Ousted: Sarkozy and his wife Carla Bruni leave the Elysee Palace, the official residence of the president, after his election defeatOusted: Sarkozy and his wife Carla Bruni leave the Elysee Palace, the official residence of the president, after his election defeat

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Posted on May 6, 2012, in Politics, World Politics and tagged , , , , , , . Bookmark the permalink. 4 Comments.

  1. You crossed the line first, sir. You squeezed them, you hammered them to the point of desperation. And in their desperation, they turned to a man they didn’t fully understand.
    :The dark knight.

    For some reason this came to mind when i saw the result of the French election!

    • The Dark Knight quote accurately describes how the American people turned to Obama, also a man they did not fully understand, back in 2008. I am not sure if Obama will win his reelection campaign this year though. Romney will probably be the candidate that people turn to in desperation. The French elections may be an indicator that it is possible for Obama to lose his reelection campaign in the same way Sarkozy did.

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