The French electorate has given us the first socialist president of France for thirty years and Greece has been left in an even more volatile position with no party having a clear majority.
All this caused by voters who were out to send a message to their politicians that the average Joe in the street should not be punished with austerity for the crimes of others.
The result is that the markets, which had priced themselves based on a future of austerity, now find that the purse strings of government may be loosened so upsetting any newly acquired balance. The Greek stock market for example took a 7% hit on the results.
In Greece the majority of seats are still held by pro-Euro, pro-austerity parties, which will mean the formation of a complicated coalition as the two main parties cannot muster 50% of the seats between them. They have until the 17th May to sort out some sort of deal or more elections will have to be held.
In France the socialist candidate Francois Hollande won the day defeating Nicolas Sarkozy, who became the first French President not to win a second term since 1981. Hollande’s campaign was fought on an anti-austerity and tax the richest basis, which will now, with the help of the Greek results, throw all the plans for an EU and Eurozone wide austerity led recovery into disarray.
The people have spoken and given austerity a bit of a bloody nose, while the financial problems for both countries remain unaltered, as do the problems for the Eurozone, EU and global economies.
The German Chancellor, Merkel, who had such a cosy relationship with the previous French President Sarkozy to the extent that they were dubbed ‘Merkozy’ as a single entity and EU engine room, wants a meeting as soon as possible with Hollande (I bet she does!) and the US President has said that he wants to meet with him within the month of May. Makes you think they want to get to him before he makes any rash and unfortunate policy decisions doesn’t it? Not that he is likely to do that anyway.
These two election results will not mean an immediate tearing up of all the measures agreed so far though as there are too many people working to ensure the survival of stability and the status quo (or as near as they can get). It will lead more likely to a nudge on the tillers of the two super-tankers that are the EU and Eurozone. A nudge that will slowly and steadily alter the course away from austerity to some sort of austerity lite with a bit of growth thrown in (as long as they can keep the markets happy with any Greek debt issues or work the most painless way to get a Greek exit – the IMF is reportedly ‘stunned’ and ‘amazed’ at the depth of anti-austerity anger in Greece). But what that austerity lite (acceptable to the masses austerity that is) will look like is too early to say yet.
Also bear in mind the powers that the French President wields, which relies on his relationship with the French National Assembly. So it’s not as if he can just get on with his own thing right away.
Image by Copyleft (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons