Eurozone elections: Rejecting austerity at the polls

 
Activists wearing masks of Francois Hollande and Angela Merkel taking part in a fake marriage in Berlin, 7 May 2012 Activists in Berlin performed a "marriage" of the French and German leaders

Events in France and Greece have unsettled the markets. Voters, given the chance, have turned against austerity. Cutting budgets has been Germany's main remedy for solving the debt crisis. Francois Hollande's election challenges that by making growth his priority.

In one of his victory speeches, he pledged to "finish with austerity". Today Germany was ruling out any significant shift in its approach.

There would be no renegotiation of the treaty enforcing budgetary discipline as Francois Hollande had called for.

The Germans do appear ready to attach a growth pact to the treaty but they will not accept countries borrowing more to boost spending.

Where might be the room for compromise?

The Germans would back funds from the European Union's structural funds supporting large-scale infrastructure projects.

They might agree to loosen some of the targets for reducing deficits.

The new French leader was told he would be welcomed with "open arms" in Berlin but it is not clear that Franco-German differences can be easily smoothed away.

The Germans will have to show some flexibility but they will not abandon insisting on tough new spending rules for the eurozone.

Uncertainty in Greece

In Greece voters were threatened that a vote against austerity could lead to their having to leave the euro.

It made no difference.

They were told that leaving the euro would usher in a period of "mass poverty". It did not deter them.

They are already facing years of hardship.

Spending cuts - with more yet to come - were a condition for receiving a second bailout from the EU and International Monetary Fund.

Politicians in Athens are now talking of renegotiating the bailout pact.

The Germans and the EU poured cold water on that. Greece faces a period of instability.

Once again Europe has a Greek problem.

Dissatisfaction spreading

Spain today saw its industrial output slump 7.5% from a year earlier, signalling that the downturn is deepening there.

Later this week the government in Madrid is likely to introduce new measures to help banks but fears are growing that the country will need some form of bailout - particularly for the banks.

In Italy, too, candidates opposed to austerity measures appear to have done well in local elections.

One candidate, Beppe Grillo, a comedian who wants to leave the euro, made big gains.

So in the eurozone there are open doubts as to whether the current policy is working while voters increasingly lose patience with spending cuts and hardship.

 
Gavin Hewitt, Europe editor Article written by Gavin Hewitt Gavin Hewitt Europe editor

Europe's troubles exposed by MH17 crash

Europe is too vulnerable economically to target the Russian economy and so risk its own fragile recovery, the BBC's Gavin Hewitt argues.

Read full article

More on This Story

Hollande in power

Comments

This entry is now closed for comments

Jump to comments pagination
 
 

Page 11 of 12

 

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.