Socialist candidate Francois Hollande has claimed his campaign for the French presidency has forced German chancellor Angela Merkel to shift her thinking and accept the need for new measures to boost economic growth.
Mr Hollande, who leads the incumbent Nicolas Sarkozy in opinion polls ahead of Sunday’s run-off, has said if elected he would demand renegotiation of the fiscal treaty to add components aimed at spurring growth and job creation.
In interviews at the weekend, Ms Merkel insisted the treaty could not be reopened and reiterated her belief in austerity, but added that EU leaders had agreed to present growth proposals at their June summit.
The fiscal treaty, which will be put to a referendum in Ireland on May 31st, obliges member states to keep budget deficits and public debts within tight limits. Mr Hollande agrees with all the treaty’s existing components, but has set out four pro-growth elements he wants added to it.
These measures are jointly issued “project bonds” to fund infrastructure and jobs; the levying of a financial transaction tax by like-minded states; more funding for the European Investment Bank to finance big infrastructure projects; and reorienting EU regional development funds towards research and enterprise.
Mr Hollande has dropped his call for jointly issued Euro bonds to mutualise the debt of Euro zone states, a proposal that met strong resistance in Berlin. Merkel said she was in favour of an increase in funding for the European Investment Bank and more flexible use of regional development funds.
Reacting to the chancellor’s comments, Mr Hollande welcomed a “shift” in EU thinking on growth and predicted the bloc would “shift further” if he were elected. He claimed the EU summit on growth had been brought forward because of his possible victory.
“Mrs Merkel, taking up an initiative from president [Herman] Van Rompuy of the European Council, says she is ready to put more emphasis on growth,” he said.
“If only for that, the campaign will have been useful and, if I am the winner, all the more so because I will go even further. There will be a renegotiation and there will be a growth pact.”
Mr Hollande also wants to change the mandate of the European Central Bank so as to allow it to lend to states. He suggested that this idea would be in the mix for wider negotiations if he won the election.
“Ms Merkel cannot want, all at the same time, to retain the current status of the ECB, to block it from lending directly to states, not to have euro bonds and remain cautious on a financial transaction tax.”