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French presidential rivals spar over markets

Text by News Wires

Latest update : 2012-04-12

Socialist candidate François Hollande accused French President Nicolas Sarkozy on Thursday of encouraging market speculation to gain votes. Sarkozy meanwhile threatened that markets would dump French securities if Hollande were to win on May 6.

REUTERS - Socialist presidential frontrunner Francois Hollande accused Nicolas Sarkozy on Thursday of encouraging market speculation for electoral gain, after the president said victory for Hollande could spur a crisis of confidence in France.

The exchange came as another opinion poll by the LH2 agency showed Hollande winning the coming duel with Sarkozy.

With tensions between the two rivals mounting 10 days before the first presidential election round on April 22, Sarkozy has warned that markets could take flight from French securities if Hollande wins power in a May 6 runoff.

“The people do not want to have some kind of diktat imposed on them from outside, so when Nicolas Sarkozy tries to call the markets to come to his rescue, that is not in the country’s interest,” Hollande said on France 2 television.

“What is in France’s interest is fighting speculation, not encouraging it under the pretext of helping him in the presidential election.”

Sarkozy - whose main asset in a close-fought duel against the popular but inexperienced Hollande is his record of managing Europe’s debt crisis - has increasingly played on fears that France under a left-wing government committed to raising spending could lose investor confidence.

Unveiling his manifesto last week, he said Hollande would lead France towards the fate of Greece or Spain.

Hollande is running on a tax-and-spend programme which he says would bring France to a balanced budget a year later than Sarkozy’s manifesto. Economists say Hollande’s spending plans would need to be scaled back to keep France’s efforts to reduce its deficit on track.

The targets are seen as crucial to Paris retaining investor faith at a time when the euro zone debt crisis refuses to abate.

“If we start hiring civil servants, if we will start spending again, if we throw the pension reform into question, it’s not a risk that interest rates will rise, it’s a certainty,” Sarkozy said on Wednesday.

“It would immediately set off a crisis of confidence.”

Battle for markets

In a research note, UBS Global Asset Management analysts highlighted the weakness in France’s public finances, saying the country no longer deserved to be considered part of the euro zone’s core countries, a category that includes Germany.

Nomura chief political analyst Alastair Newton said that deepening market concerns about Spain and Italy could quickly spill over onto France if Hollande wins May’s final vote.

France, which has not balanced a budget since 1974, lost its AAA credit rating with Standard & Poor’s in January and its public finances are still under scrutiny by market analysts.

“A ratings agency downgrade is a high probability, though that is not the end of the world, as soon as Francois Hollande would move on Nicolas Sarkozy’s pension reform,” said Newton.

Hollande is running as many as 10 percentage points ahead of the incumbent in opinion polls for a May 6 deciding round, although Sarkozy recently nudged ahead in voter surveys for the first-round vote between 10 candidates.

An LH2 poll published on Thursday showed Hollande winning a runoff with 55 percent of the vote to 45 percent for Sarkoy, and said the number of people whose voting plans were set in stone was now just short of 90 percent.

Recent polls suggest the modest gains Sarkozy made in the last couple of weeks are now petering out.

Sarkozy’s effort to persuade voters he is the best man to lead an economic recovery suffered a setback this week when a survey showed growth stalling.

He spoke on Friday to U.S. president Barack Obama, who also faces an election this year, about international issues.

“Busy times,” said Obama, who went on to say he admired his counterpart’s battle for re-election, according to an official readout of the video conference call between the two men.

To which Sarkozy replied in English: “We will win. You and me.”

Date created : 2012-04-12


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