Tuesday 26 September 2017

Hollande's aim is to protect France, not support others

Thomas Molloy

Thomas Molloy

A FRANCOIS Hollande victory will lead to some changes inside Europe but most analysts say there will be no major U-turn.

While Mr Hollande undoubtedly believes he can reduce the pain of austerity and start spending again, he is likely to discover this is impossible.

Alan McQuaid of Dublin-based Bloxham Stockbrokers wrote yesterday that "Germany, Europe's paymaster, would not stand for it. Nor, in their current mood, would the bond markets."

The relationship between the two biggest countries inside the eurozone will be key to determining whether the currency bloc survives. Mr Hollande will try to steer the Franco-German alliance leftwards. That could possibly dampen demands for austerity or destroy the alliance completely.

The outlook for Ireland would be very gloomy if his efforts destroyed the union, something most observers believe to be possible but unlikely. Even if this does not happen, it is worth remembering that many of Mr Hollande's policies are designed to prevent France getting into further trouble rather than helping countries which have already received a bailout.

He wants the EU to give governments more time to lower their budget deficits to the mandated threshold of 3pc of national output. That would help France but would have no effect on countries like ours, where we are years away from hitting such targets.

He also talks of using the European Investment Bank to finance infrastructure and other development schemes, but Ireland has been bad at extracting money from these funds in the past and there is no reason to believe we will improve.

Unlike President Nicolas Sarkozy, Mr Hollande has expressed no interest in Ireland's corporation tax rate. Most observers here hope he will continue to ignore the issue -- although his instincts are likely to be even more opposed to the tax breaks than Mr Sarkozy.

Irish Independent

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