The front pages of Spanish newspapers Monday featured Socialist Francois Hollande, the winner of the second round of the French 2012 presidential election. Hollande beat incumbent Nicolas Sarkozy in a runoff election becoming the first Socialist to win a French presidential election since 1988.- DOMINIQUE FAGET/AFP/GettyImages
Supporters of Socialist Party candidate Francois Hollande celebrate at the Place de la Bastille in Paris on May 6, 2012 after the announcement of the first official results of the French presidential final round. Hollande won a runoff election with between 52 and 53 percent of the vote, ousting right-wing incumbent Nicolas Sarkozy.- FRANCK FIFE/AFP/GettyImages
France's newly elected president Francois Hollande greets celebrators at the Place de la Bastille in Paris on May 6, 2012 after results of the French presidential runoff named Hollande winner over right-wing incumbent Nicolas Sarkozy.- FRANCK FIFE/AFP/GettyImages
French President Nicolas Sarkozy addresses his supporters after losing his bid for re-election to Socialist Party candidate Francois Hollande. Sarkozy's defeat illustrates popular opposition to austerity measures in Europe as the continent struggles to climb out of its debt crisis.- Photo by Dominique Charriau/Getty Images
A campaign poster on a Paris street of France's President Nicolas Sarkozy reads 'You've lost!' after results from this weekend's run-off election were announced with the victory going to challenger Francois Hollande.- JOEL SAGET/AFP/GettyImages
Supporters of France's newly elected president Francois Hollande celebrate at the Bastille Square in Paris on May 6, 2012. Hollande was elected France's first Socialist president in nearly two decades on Sunday, dealing a humiliating defeat to incumbent Nicolas Sarkozy and shaking up European politics.- BERTRAND LANGLOIS/AFP/GettyImages
Greece's two main political parties suffered big losses in state elections on May 6, throwing into doubt the eurozone state's austerity plans after a strong showing by protest groups, including the neo-Nazis party Golden Dawn, which is set to enter parliament for the first time since 1974.- SAKIS MITROLIDIS/AFP/GettyImages
The leader of the Greek leftist coalition Syriza, Alexis Tsipras, waves at supporters in Athens on May 6, 2012 after the first results of the Greek general elections were announced. Greece's two main parties suffered big losses, exit polls showed, after a strong showing by protest groups voted for change to the country's political and economic landscape.- ARIS MESSINIS/AFP/GettyImages
France elects Socialist candidate Francois Hollande
Jeremy Hobson: An end to austerity, that's what the winners of yesterday's elections in France and Greece say voters want.
Both countries shook up their leadership - with Socialist Francois Hollande beating Conservative Nicolas Sarkozy for the Presidency in France, and anti-austerity parties taking more control of the Parliament in Greece.
Marketplace's Stephen Beard is with us live from our European desk in London with more. Good morning.
Stephen Beard: Hello Jeremy.
Hobson: Are we waking up to a new reality in Europe this morning?
Beard: Yes, this does strengthen the hand of those in Europe who argue that austerity is not the best way to deal with government debt - that countries should try to grow their way out of trouble.
The French vote, says Lena Komileva of G+ Economics , is futher evidence that the people of Europe don't want any more budget cuts.
Lena Komileva: Ultimately it's a backlash against the current status quo - the current direction of economic management - against austerity and against bailout.
So the French result could strain relations between France and the pro-austerity Germans. But there's something else here: the election also saw a big upsurge in opposition to the Euro itself in France, which could oddly enough, have big implications for the weakest Eurozone nation - Greece.
Hobson: You're saying the the elections in France are going to impact Greece as much as the elections in Greece?
Beard: Yes, because these elections in Greece were indecisive and left the country in total disarray. And it raises the possibility that Greece after all this trouble will default.
Some analysts are saying the French and the Germans may then decide that because of all these strains the Euro is on the brink - it's in real danger of falling apart. And they could then decide to get rid of the country which many see as the initial source of all the trouble: Greece.
Hobson: In this country, and even in the U.K., what can we take away from all this? How does this matter to the global economy?
Beard: Well this matters because its more doubt and uncertainty just as there are worries about the U.S. recovery faltering and China slowing down - one more problem the world economy could well do without.
(TEXT OF PREVIOUS INTERVIEW)
Hobson: Well Stephen, let's start with France.
Beard: This is the sixth occasion when a European political leader - in the case of Sarkozy - has fallen largely because of voter discontent against austerity.
The new guy, Francois Hollande, comes to power saying we must have growth. He's planning to increase public spending. He says he's going to renegotiate the new tighter budget rules championed by Germany.
This seems to put France on a collision course with its most important Eurozone partner, Germany. Here's Lena Komileva of research house G+ Economics.
Lena Komileva: The change in the French presidency will almost certainly inject political uncertainty in the Eurozone's core, disrupting the Franco-German axis of cooperation, while at the same time it will export additional financial stress to the Eurozone's periphery, especially to the likes of Italy and Spain.
Beard: And the borrowing costs of Spain and Italy and Greece have been rising this morning. the interest rate for Greece's 10-year government bonds has now hit 22 percent.
Hobson: Let's talk about Greece. It's been at the center of the debt crisis and there have been some changes there over the weekend.
Beard: Yes indeed. And this election result poses the most immediate threat to financial markets because it raises even further the possibility of a Greek default.
There is now the possibility that the left-wing coalition - these are the guys that were involved in yogurt-throwing demonstrations during the election campaign - it is possible they might form a government. If they do, they've pledged to scrap the bailout agreement. That would lead very likely to a Greek default.
Hobson: Marketplace's Stephen Beard in London. Thanks very much.
Beard: Okay Jeremy.