The stunning victory of the French Socialists and wipe-out of mainstream parties in Greece sent shock waves on Sunday night crashing throughout the continent of Europe.
Supporters of Socialist Francois Hollande celebrate in Paris Photo: EPA
François Hollande’s election threws down the gauntlet to Angela Merkel, the German Chancellor, who has railroaded the eurozone into agreeing a new “fiskalpakt” treaty enshrining Germany’s austerity doctrine.
The economic doctrine of austerity, to cut the burden of state spending to free up the economy, has ruled supreme with the support all of Europe’s leaders, the European Union and financial markets.
But political leaders were on Sunday night conceding the consensus had been shattered beyond repair.
With Europe’s economies plunging further into recession and as unemployment in the eurozone breaks record levels, voters demands for a new approach had finally become to great to ignore.
The popular backlash to EU imposed austerity to the centrist New Democracy and Socialist parties in Greece threatens the existence of the euro itself.
Greece is potentially ungovernable as a minority government must try and pass a new raft of austerity measures next month which are a condition of an EU-IMF bailout and Greek membership of the euro.
In France, while Hollande, the Socialist President-elect is a centrist, he is sitting on a powder keg of resentment at measures that his government will have to pass if it is not spark a meltdown of financial markets.
He has refused to ratify the treaty unless the eurozone and EU also sign up to a “growth pact”.
Mr Hollande also horrified Berlin by sneering at the idea that France should change its constitution to enshrine a “debt brake” outlawing Socialist spending levels.
In a meeting in Berlin next week, Chancellor Merkel is set to warn the French President, that weakening austerity pledges would rattle markets and undermine investor confidence at a critical time for the eurozone’s economy.
She will remind him that support for the eurozone austerity pact is the condition for European Central Bank support for struggling financial institutions, many of which are French.
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- Socialist Hollande ousts Sarkozy in French vote (hazimc.wordpress.com)
- Angela Merkel and François Hollande on collision course over EU finances(guardian.co.uk)