French election outcome might not deliver
David Brancaccio: If, as expected, socialist Francois Hollande is elected the next president of France this weekend, to what extent will budget realities crimp his ability to ease off the austerity that he believes is hurting the economy?
The BBC’s Hugh Schofield is in Paris. Good morning.
Hugh Schofield: Good morning.
Brancaccio: Hugh, in what way does Francois Hollande want to roll back Sarkozy’s austerity measures?
Schofield: In two different ways, really. On the one hand, he wants to retain — or even increase — the very high level of public spending in France, and he plans to do that by putting up taxes on the wealthy and some corporations. The other thing is that in Europe, he wants to introduce into the famous budget stability pact — which was negotiated by Angela Merkel and Nicolas Sarkozy — a new protocol or some kind of new element which will promote growth.
That sounds very good, but no one’s quite sure what that means. But he says he’s in tune with a new mood in Europe, which is: this austerity in itself is not enough; we need to promote growth. And that’s what he’s saying France — and indeed Europe — needs.
Brancaccio: Which is all well and good, if there’s money for any of this. Does he have a source for either borrowing the money, or getting the resources necessary?
Schofield: On the national level, when he talks about retaining spending — or even increasing spending — he’s says it’s a marginal increase and he can do it by raising taxes. On the European level, I think it’s all been left deliberately vague; because he can claim as things stand that he’s in tune with other European leaders who are also saying: yes, maybe we need to do more to promote growth.
But what Hollande wants — some kind of move towards nationalization of all European countries of their debt. And it’s quite clear that from a central European perspective, their new ideas for growth are much more linked to the idea of reforming economies, increasing competitiveness, and in France’s case, clearly bringing down the cost of labor and doing some of the structural reforms which have not been mentioned at all in the campaign — certainly not by Hollande.
Brancaccio: The BBC’s Hugh Schofield in Paris. Thank you very much.
Schofield: Thank you.
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