French President Nicolas Sarkozy believes Sunday’s presidential election run-off against Francois Hollande will be decided by the tightest margin.

The two rivals took part in a heated debate on Wednesday night, watched by an estimated 17.9 million people.

Mr Sarkozy said on Thursday that no election had ever been so “undecided”.

Mr Hollande, who leads in the polls, told French radio that the final days of the campaign and the voter turnout could both affect the result.

The two men are both attending final mass rallies on friendly territory: Mr Hollande in the south-western city of Toulouse and Mr Sarkozy in the southern port of Toulon.

Each man has stepped up his appeals to voters who backed National Front leader Marine Le Pen and centrist Francois Bayrou in the first round.

Ms Le Pen, who attracted 6.4 million voters, said on Thursday that the election was over as Mr Sarkozy was “beaten a long time ago”.

Mr Bayrou, who attracted almost 9% of the first-round vote, is set to announce shortly whom, if anyone, he favours in the second round.

During Wednesday’s debate, the two candidates traded accusations, with the president calling Mr Hollande a “little slanderer”, while his rival said Mr Sarkozy had shirked responsibility.

The programme, broadcast on TF1 and France 2, was also carried on four other smaller channels, and lasted two hours and 50 minutes, a record for a French election debate.

But the audience was slightly smaller than the 20 million people who watched the event five years before.

Mr Sarkozy defended his record and said he had kept France out of recession while Mr Hollande said France was going through a “serious crisis” and was struggling with slow growth.

Read more at the BBC….

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A reader writes in response to my post on France's proposed transaction tax on banks:

Read you everyday.

How can this possibly work?  You know as well as I do that any charge applied by the government to the banks will end up being paid for by the consumer.  The cost of doing business regardless of business is always passed on to you and me.

Agreed – that is unless there is multilateral action against the cost being passed on to the consumer. I think it's brave that Sarkozy is attempting to start a chain reaction (although it's not going down well in the UK) as shaming others into action seems like the only way to be effective. 

Of course, the proof will be in the pudding, and we'll have to see how the policy (if implemented) works.

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Finally, a Western country has taken the initiative in actually making banks pay for the colossal damage they have done. From the BBC:

French President Nicolas Sarkozy has announced plans to introduce a tax on financial transactions. The 0.1% levy will be introduced in August regardless of whether other European countries follow suit. The tax is part of a package of measures set out by the president to promote growth and create jobs…. In an interview with French television, Mr Sarkozy said he hoped the tax would push other countries to take action.

"What we want to do is create a shockwave and set an example that there is absolutely no reason why those who helped bring about the crisis shouldn't pay to restore the finances," he said.

"We hope the tax will generate one billion euros ($1.3bn, £0.8bn) of new income and and thus cut our budget deficit."

Sarkozy is a center right politician attempting to introduce what is generally viewed as a left wing tax. The truth is that the financial industry is severely undertaxed, and anyone with a realist view of economics understands this. Above all, Sarkozy is a pragmatic politician who realizes that the status quo is completely unsustainable. He is behind in the polls to the socialist party and the public is eager to enact punitive policies agains the banks.

While there are political calculations at hand, it is quite a brave move to take the lead in introducing a tax like this – if it goes through, the argument becomes much more powerful for other leaders to do something similar.

The political pressure in Britain to enact a tax like this could be too much for David Cameron to fend off and the Conservative government might be spurred into action (despite having blocked similar proposals last year). It will of course be far, far harder in America due to the Republican congress and Democrats bought off by the banking industry. But the ripple effect in Europe should not be underestimated if Sarkozy does implement his plan. It will show that governments and the public do have the power to hold the banking industry to account, possibly marking the beginning of a new and more just era. 

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