Plus ça change? Maybe this time


By giving victory to François Hollande French voters have provided France and Europe with an opportunity for a fresh start politically and economically. He has an electoral mandate to pursue policies of growth and employment that build on existing efforts to manage and resolve the euro zone crisis. As he is well aware, without such action at European level his domestic programme will not succeed. He has the skills and policies to do so, and his election sets a trend that could transform European politics. The difficulties facing the euro are further dramatised by the outcome of Greece’s general election, which puts that country’s bailout once again in question.

It was a close fought election in France with a tight result on a high turnout, but it marks a decisive end to Nicolas Sarkozy’s one-term presidency. He failed to fulfil his promises of widespread change in French society and antagonised voters early on by his personal style. He leaves Mr Hollande, a centrist social democrat, with a daunting challenge to convince his political partners in the European Union and the financial markets that a different kind of change is possible. In France he gives priority to an agenda of greater fairness, equality and social cohesion. He voices, and will give focus to, the widespread criticism around Europe that budgetary disciplines alone cannot deliver growth and jobs but must be joined by further measures.

These could be added to the fiscal compact treaty on which Irish voters are to decide on May 31st. Mr Hollande proposes four immediate measures: bonds for particular investment projects; recapitalising the European Investment Bank; more effective use of unused EU structural funds; and a financial transaction tax to calm markets and raise money. These relatively modest proposals are pitched at reaching rapid agreement with Germany, since Mr Hollande also knows the Franco-German relationship remains crucial for French interests and influence in the EU.

Such measures could help kickstart economic growth, but even together with the fiscal treaty they will not be sufficient to stabilise the euro. That agenda is made even more urgent by the political instability in Greece thrown up by the weekend election results, which are set to cause yet more financial market pressure on the system. Deeper fiscal and political union within the euro zone is thereby put in prospect over coming years, probably involving communitised eurobonds and a banking resolution regime capable of handling debt writedowns and defaults if the single currency is to survive.

Ireland along with all the other members of the EU has a central interest in finding such solutions and would be best positioned to seek them by staying within the developing regime. States such as Italy and Spain are equally challenged by these wider developments in European politics and will be seeking to influence the emerging policy agenda, irrespective of their particular left or right-wing alignment. But Mr Hollande’s victory clearly heralds a rebalancing towards the centre left after a period of centre-right dominance.