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Markets anticipate Hollande victory

Friday, May 04, 2012 - 02:36

May 4 - Socialist Francois Hollande is the frontrunner in France's presidential election on Sunday and analysts say there's uncertainty about how many economic policies he will implement and how he will work with German Chancellor Angela Merkel to tackle the euro zone debt crisis. Joanna Partridge reports

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The man expected to be the next French President. Socialist Francois Hollande has been leading opinion polls ahead of President Nicolas Sarkozy for several months. Economist Philippe Brossard says the markets are already expecting a Hollande victory. SOUNDBITE: Philippe Brossard, Chief Economist, Ag2r La Mondiale, saying (English): "The market will progressively assess what will be Hollande's economic policy. From what he already announced, it looks sorts of leftish, but centre-left. It will not be so much different, actually, from the current economic policy stance, but mainly because they are working the same European frame." Sarkozy and Hollande have both said they want to reverse France's industrial decline, make it more competitive and cut the budget deficit. Hollande's proposing doing this by raising taxes rather than cutting spending. The top tax rate would be 75% for people earning over a million euros. PTC: While Francois Hollande has certainly grabbed the headlines with some of his economic policies, analysts are already questioning how many of these policies he'll be able to implement. Across the Channel in the City of London, analysts are still cautious, says Michael Hewson from CMC Markets. SOUNDBITE: Michael Hewson, Market Analyst, CMC Markets, saying (English): "There's a lot of uncertainty with how a new French president would change the political dynamic between Germany and France. I mean, Mr Hollande has already said he wants to renegotiate the fiscal compact, Angela Merkel has implicitly ruled that out. He's also gone on record as saying that he wants to raise the minimum age and reduce the retirement age, well that's really going to grate with Germany." Germany has led the European push to tackle the debt crisis with austerity. Now Hollande's call to put growth first seems to have struck a chord in Europe. The government in the Netherlands resigned over the budget and the country is in recession. SOUNDBITE: Philippe Brossard, Chief Economist, Ag2r La Mondiale, saying (English): "Holland, one of the rare triple A being in such difficulty, Berlin looks more and more isolated." If Hollande is elected he'll have to get used to working with the Germans. And analysts say he may find his hands are somewhat tied by Europe. Paris plays an important role at the heart of the euro zone. But the choice made by Greek voters on Sunday will also determine Europe's future path. Joanna Partridge, Reuters

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Markets anticipate Hollande victory

Friday, May 04, 2012 - 02:36