François Hollande has been elected France’s president on the promise that there is an alternative to an unexpurgated diet of austerity. His comforting message stood in stark contrast to that of the incumbent, Nicolas Sarkozy, who pledged that painful choices would be rewarded with jobs, growth and a brighter future. Neither was wrong.
As the first Socialist president in almost two decades, Mr Hollande takes power at a critical juncture, not just for France but for Europe. Despite several years of belt-tightening, growth in Europe is stagnating and millions are still out of work. In France, 10 per cent are unemployed, competitiveness is sliding and labour costs are among the highest in the OECD. France has run a budget deficit for almost 40 years, and this year lost its triple A credit rating.
These are the harsh realities that Mr Hollande faces. He is right to argue that, without measures to promote growth, a European fiscal pact requiring budget cuts and spending caps risks trapping the region in a downward spiral. There is no hope that Germany will accept a renegotiation of the fiscal treaty. But it could help recovery in the peripheral economies by promoting consumption at home or with a new European growth pact.