Sunday, 6 May 2012

Financial markets present President Hollande with his first challenge

Francois Hollande
To date financial markets have been pretty sanguine about the prospect of France gaining its first Socialist president in 17 years in Francois Hollande.
Now that his second round victory has been secured, the first test comes just hours from now when markets re-open in the Far East.
I would be surprised if there is any rush to dump French government bonds and bank shares.
The prevailing wisdom is France's problems like much of the Eurozone are so complex that for all his rhetoric Hollande has little room to distance himself from Mrs Merkel's austerity programme to save the euro.
His room for manoeuvre being limited, the world's money men and women seem confident he will be unable to implement key elements of his tax-and-spend manifesto.
On this side of the Channel, Labour's Ed Miliband and Ed Balls would be wise not to crow too loudly about the Socialist victory.
It could be that come the next UK General Election in 2015, Hollande might have been shown to have  failed on his promises to the French people.

3 comments:

  1. I'm worried about Europe. On the surface it seems to be the most sophisticated area of the world. Yet its financial crisis is putting democracy there under strain. Sarkosy goes overnight but Le Pen remains with an 18 per cent share of the vote. If the socialists in France fail, then what?
    [Jaffa]

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  2. The more immediate danger is the prospect of Greece tearing itself apart. GC

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  3. It is debt and its consequences which is undermining European democracy. The electorates are rebelling against the austerity programmes. Voters brought up on a never ending diet of consumerism do not have the stomachs to absorb the fall in living standards and the poverty that austerity imposes.

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What do you think? GC