France, Netherlands backing down from austerity

The frontrunners for the French 2012 presidential election, France's socialist party candidate François Hollande and France's incumbent president and Union for a Popular Movement candidate Nicolas Sarkozy.

David Brancaccio: Europe's strategy for dealing with it's debt crisis was called into question over the weekend following two big political developments: One in France, one in the Netherlands. Both countries are rejecting austerity and budget cuts.

Marketplace Europe correspondent Stephen Beard reports.


Stephen Beard: In France, President Nicolas Sarkozy lost the first round of the Presidential election to a Socialist candidate . This is widely seen as a vote against austerity.

And in the Netherlands planned deficit reduction also got the thumbs-down. The government there has fallen apart after failing to win support for its public spending cuts.

Simon Tilford is with the Centre for European Reform. He says, what’s happened in both countries sends a clear signal.

Simon Tilford: Taken together, I think, they’re further evidence that the current strategy for dealing with the eurozone crisis, basically austerity all round, is just not working.

He says it is slowing down European economies, raising unemployment and increasing budget deficits.

Here’s Steve Barrow of Standard Bank.

Steve Barrow: Some people obviously see that as being a consequence of having this austerity forced upon them by Germany.

And analysts say there’s delicious irony in the Dutch discomfort. The government in Netherlands has been a close ally of the Germans and has been one of the leading cheerleaders for ever deeper cuts in public spending.

In London, I’m Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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