By Ben Cohen: Socialist Francois Hollande’s victory over Nicolas Sarkozy for the French Presidency could mark the beginning of a new economic era, not just in Europe, but the world. Hollande promised to reverse the austerity measures passed by Sarkozy that has yielded few benefits for France in recent times, and adopt a pro growth economic strategy based on government spending. Hollande hopes that he can pave the way for a new direction in Europe, challenging the German led austerity policies. He will face huge opposition to his proposed strategy for the 5th largest economy in the world, but if he pulls it off, it could spark a change that could shift the balance of power between national governments and the banks.
In Greece, the coalition government (made up of the center right party New Democracy, and the center left Pasok) also suffered a huge electoral loss over the weekend, losing their majority in parliament. The Left wing coalition Syriza made big gains coming in second to New Democracy, signalling widespread dissatisfaction with austerity measures supported by the coalition government.
Benedict Brogan of the Telegraph wrote the following:
Mr Hollande’s win, backed by the wholesale rejection of mainstream parties in Greece, the collapse of the Dutch government, protests in Spain and mayhem elsewere, tilts the balance of the European debate sharply away from austerity….This will change the dynamic of European politics in far-reaching ways. All eyes now will be on Angela Merkel and her fight with the SPD.
Hollande has proposed close the budget deficit by hiking taxes on the rich and big corporations, and more importantly wants to renegotiate the EU fiscal pact that has emphasized austerity above everything else. After his victory, Hollande said:
“Europe is watching us. I am sure that when the result was announced, in many European countries there was relief, hope and the notion that finally austerity can no longer be the only option. And this is the mission that is now mine — to give the European project a dimension of growth, employment, prosperity, in short, a future. This is what I will say as soon as possible to our European partners and first of all to Germany, in the name of the friendship that links us and in the name of our shared responsibility.”
Conservatives around Europe have been extremely nervous about the election of Holland, warning that by electing a socialist, Europe’s recovery is at stake. Ian Duncan Smith, Britain’s Work and Pensions Secretary said of Mr Hollande:
“He’s said he’s going to come out, he’s going to spend money, he’s going to raise taxes, everything he says will suddenly change the French economy. If he does any of that, it will have a shockwave effect in Europe. I think it could cause major ructions with Germany right now….If the idea of Francois Hollande is he comes in now with a major set of deficits and with huge debts, to spend huge amounts of money… he’ll put a further burden on the taxpayers of France.”
The victory of Hollande and the Greek electoral upset are proof that the population in Europe are fed up with the status quo and want to follow a different course. They have spoken with their vote and have changed
For over a decade, Europe has been largely run by centrist and center right governments that have deregulated markets, cut social welfare and worked to further the interest of banking institutions. While some economies saw significant growth, much of it was built on financial speculation and massively inflated real estate bubbles – all of which came crashing to an end when the banks were unable to cover their losses. Disastrously, those same center right governments managed to convince their populations that they had the answer to the problems they had created, leading to a prolonged recession and further economic instability after austerity measures were passed. After several years of economic pain and no end in sight, the Right is finally succumbing to reality – their policies are failing and voters want change.
The election of a Socialist to a country as powerful as France sends a message to banking institutions that governments will no longer necessarily do their bidding, and this could have a far reaching effect around the world. For too long the status quo has been accepted as the only course of action in the industrialized world. The religion of the free market has pervaded every aspect of political culture, with parties clamoring to the center in order to remain viable in the eyes of powerful financial interests. This is no longer the case as the Left is beginning to consolidate a new power base built on popular support and a positive vision of the future.
Hollande has a huge task ahead of him – he is the most prominent socialist in the world, and he must build bridges to have a chance of taking on the banks. His victory will encourage left wing parties across the continent, and the dominance of the Right may finally come to an end. Together, populist governments can dent the grip financial institutions wield over the global economy – and that could mean we are now in the beginning of a new economic era.