Angela Merkel is not happy, as she is the driving force behind the austerity programs in Europe, not to mention her hands on the checkbook.
The election of a 'socialist' President in France may lead to renegotiation in the EU agreements on bailouts. Personally, as someone on the front line of the EU economies, I think austerity has probably gone too far. Yes, Greece is probably out of the EU, but Spain and Italy are not. And the business climate in those countries is simply terrible. No one is spending any money and further cuts in spending won't help
Hollande to Discuss Growth With Merkel
By GABRIELE PARUSSINI, WILLIAM BOSTON and WILLIAM HOROBIN
French voters elected François Hollande as president, who has pledged to shift the burden of hardship onto the rich and resolve the euro sovereign-debt crisis. David Gauthier-Villars has details on The News Hub. Photo: AFP/Getty Images.
PARIS—France's President-elect François Hollande will be inaugurated next Tuesday and head to Berlin soon after that to meet Chancellor Angela Merkel to deliver his proposal for resolving the euro-debt crisis by complementing the current austerity regimen with growth-boosting measures.
President-elect Francois Hollande waves from the balcony of the Socialist Party headquarters in Paris Monday.
The meeting will offer early clues on how far the two leaders are ready to go to reconcile their differing approaches to restoring confidence in the euro zone.
Mr. Hollande shaped his election bid squarely on the theme of changing the bloc's response to its deep sovereign-debt crisis. From the beginning of his campaign, the French Socialist said he would seek to renegotiate the fiscal treaty agreed by European leaders last year, in order to promote Europe's struggling economy and create jobs. Ms. Merkel and her government, fearful of popular resistance in Germany, have made clear in recent weeks that they won't soften their austerity demands, a point the German leader made again on Monday.
"We in Germany, and me personally, are of the opinion that the fiscal pact is non-negotiable," Ms. Merkel told reporters at her party's headquarters in Berlin. "I consider the fiscal pact to be right, and I think there is a basic process in Europe that we agree that after elections, whether in big countries or little countries, we cannot just put everything up for discussion that was negotiated previously."
Francois Hollande spent election day in the small town where he had held the post of mayor in contrast to Nicolas Sarkozy who five years ago celebrated in a posh restaurant in Paris. Inti Landauro reports on Mr. Hollande's strategy to become President.
But Ms. Merkel said she would "work well" with Mr. Hollande, whom she spoke to for the first time on Sunday night after his victory, which will return a Socialist to the Elysée presidential palace for the first time in 24 years. "German-French cooperation is essential for Europe," Ms. Merkel said. "Germany will welcome François Hollande with open arms. And then we will work together."
Ms. Merkel and Mr. Hollande got off to a rocky start, with the chancellor openly supporting the re-election bid of her center-right ally President Nicolas Sarkozy, with whom she formed the "Merkozy" couple steering the euro zone through its protracted crisis. Ms. Merkel refused to make any face time in her calendar for Mr. Hollande while he was campaigning, clearly irked by his criticism of the austerity that forms the heart of her response to the crisis.
"The Germans will be happy if it is only saying the word growth, everybody wants growth," said Mr. Chaney. "So a compromise is possible, but not on the fiscal part of the treaty."
Investor reaction Mr. Hollande's election was hard to gauge with U.K. financial markets closed for a holiday and investors also digesting Greek elections, which recorded a surge in popularity for extremist parties that prevents the two main parties forming a coalition. "For now at least Greece appears to be the bigger problem—and one which has caught the markets unawares," said Alastair Newton, senior political analyst at Nomura. The jury is also still out for Standard & Poor's Ratings Service, the firm that stripped France of its prized triple-A rating in January. There is "no immediate impact" on France's double-A rating and the negative outlook, S&P said. Like economists, S&P said it will analyze the policy choices of Mr. Hollande, taking into account the outcome of parliamentary elections in June.
Even the outgoing finance minister François Baroin—a senior member of Mr. Sarkozy's UMP party—showed a willingness to accord Mr. Hollande the benefit of the doubt. Speaking on French television Monday, Mr. Baroin said it is too early to say how markets will react, noting France benefits from exceptional low borrowing costs on markets, both historically and relative to euro-zone peers. And last week, Mr. Hollande himself dismissed the possibility of a fallout on financial markets. "The markets aren't moving. … And I don't doubt that it will remain like that the day after our victory," Mr. Hollande said at a campaign speech in Toulouse.
Messrs. Hollande and Sarkozy agreed Monday on May 15 as the date of the transfer of power in France. The French people will get their first glimpse of the president-elect in an official role on Tuesday, as Mr. Hollande will attend national memorial ceremonies to commemorate the end of World War II in Europe, alongside Mr. Sarkozy. A few days after his inauguration, Mr. Hollande will cross the Atlantic to meet President Barack Obama before a summit of Group of Eight leaders set for May 18-19 at Camp David. From there, he'll travel to Chicago on May 20-21 to announce to allies in the North Atlantic Treaty Organization of his intention to hasten the withdrawal of French combat troops from Afghanistan.
Between this month and next, a stack of economic data on growth and employment will also give Mr. Hollande a better idea of the state of the French economy, which is now going through a soft growth patch, with gross domestic product expected to expand 0.7% this year.