French poll favourite plans for EU growth

AGENCE FRANCE PRESSE

PARIS: French election favourite Francois Hollande received a surprise boost today when the head of the European Central Bank echoed his call for coordinated measures to boost growth.

Hollande, the Socialist frontrunner in the presidential race, is campaigning on a vow to renegotiate the EU fiscal pact in order to complement its austerity rules with more targeted investment in jobs and growth.

“On the day after the election, if I have received a mandate, I will send a memorandum to the other heads of state on renegotiating the treaty,” he said.

And he cited four planned changes — creation of eurobonds to finance industrial infrastructure projects, freeing up of investment funds, a financial transaction tax and mobilising unused structural investment funds.

Previously, Hollande’s plan to renegotiate the treaty had been attacked by France’s right-wing incumbent Nicolas Sarkozy, who signed the pact last month but has yet to see it ratified by parliament. He warns re-opening the hard-won deal would risk damaging the eurozone’s credibility on the markets.

French voters gave Hollande first place in Sunday’s first round vote, sending Hollande to his May 6 run-off with Sarkozy as favourite, and today he received an unexpected boost from ECB governor Mario Draghi. “What is most present in my mind is to have a ‘growth compact’,” Draghi told the European Parliament’s Economic and Monetary Affairs Committee, tacitly endorsing Hollande’s controversial position. Even Germany’s Angela Merkel, the arch-defender of austerity rules and deficit-cutting targets embedded in the fiscal pact, conceded that Europe might need means to encourage output “in the form of structural reforms”. “On one hand, that can be done with a sustainable fiscal policy, that is necessary but not sufficient method of overcoming the crisis because we need growth.”

The French Socialists had long argued they have support in other European capitals, despite Merkel and Britain’s Prime Minister David Cameron’s backing for Sarkozy.

The credibility of Cameron’s austerity measures was rocked with confirmation that Britain was back in recession, and EU-mandated cuts have triggered protests in Greece, Italy and Spain.

In a television interview Hollande sent Merkel a firm message: “Budgetary responsibility? Yes. Austerity for life? No.” He promised to visit Germany, but of Merkel he said: “She led Europe alongside Nicolas Sarkozy. We can see the results! If I am elected president, there will be a change in how we build Europe.”