After the victory of socialist Francois Hollande in French presidential EU cautiously observe the first movements of the president-elect, who advocates closer economic measures that growth austerity.
The steps to François Hollande has committed to implement in the first weeks of his mandate are a temporary stop to gas prices and an increase in the subsidy given to parents with school-age children.
Also partially reverse Hollande wants 's decision to raise the retirement age to 62. With Hollande as president, people who started working at age 18 can retire at 60.Later, in an extraordinary parliamentary session, into law the main points of its program budget.
These include a new tax rate of 75% for those with incomes over one million euros ($ 1.3 million), containment of certain tax exemptions, and a new tax on banks and oil companies.
Also wants to create 60,000 jobs in the faculty in five years and 150,000 civil service jobs for young people.According to Sophie Pedder, Paris correspondent for The Economist, "with its program, tax revenues will rise in France without an apparent effort to reduce expenditure to a manageable level.""Currently, public spending in France is 56% of GDP, higher than in Sweden. It is therefore a country that already has a high level of taxes and spending, and Hollande wants to raise the two.The key question is whether, in due course, Hollande can apply what you have promised.Bond markets, which raise the money borrowed by France to keep its economy going, and are watching closely.
In January, the risk rating agency Standard & Poors downgraded the sovereign status of French from the highest rating AAA.
If the markets perceive the slightest suspicion that the French government is letting spending skyrocket, interest rates go up they charge for lending money to France.And this, says Sophie Pedder, lead to the end of the great socialist schemes de Hollande."What worries me is not that you do not have room for maneuver, but did not prepare their constituents for the inevitable disappointment," he says."What happens when you have to approach them and say, 'sorry, I can not, I have no money'?. It is a great political risk."
But advocates say Hollande program that plans are perfectly realistic, and angrily rejected the accusations that the Socialist Party may be unable to control the budget."Let us try to escape from the cartoons," says Thomas Piketty, a professor at the Paris School of Economics."In the 90's were socialist governments which France prepared for entry into the euro, which resulted in a sharp reduction in the deficit," he continues."The socialist governments want to spend money on housing, education and good public services. Do not want the money used to pay interest on debt. So they have more incentives to the right to control the deficit," he adds.
The neighboring Europe
The other fundamental aspect of economic policy Hollande, its position on the fiscal pact, restless Europe.The president-elect wants to renegotiate the fiscal pact, which aims to reduce national deficits of the eurozone countries, to add new provisions for growth.To Piketty, the European de Hollande is one of the main reasons explaining the socialist has the support of many French economists."The solution to the debt crisis that imposed and Nicolas Sarkozy was clearly not lasting," he says.
"What is needed is a far more ambitious European project and this is what represents Hollande. He defends European bonds and the beginning of a pooling of European national debt.
"This move towards greater political and economic integration is the only serious way to save the euro," says Piketty.
Hollande is fortunate that his call to put more emphasis on growth and less on austerity coincides with similar calls from other places in Europe and the United States and the International Monetary Fund.However, it is doubtful that Hollande's version of what constitutes a growth strategy coincides with that of other European legislators."Hollande is driving a new kind of Marshall Plan for Europe, with the loan financed by the European Central Bank. But basically it comes to spending more and request further provided, and it will not be acceptable in Germany," says Pedder.
While the European Central Bank chief Mario Draghi, also spoke of a "Partnership for Growth," Draghi on Wednesday made it clear that for him this did not mean loosening restrictions on public purse.By contrast, called for greater labor market flexibility, in order to protect certain categories of workers and steps to improve conditions for entrepreneurs.In other words, the kind of reforms that do not receive any mention in the program of François Hollande.