Are markets afraid France will elect a Socialist?

By Sarah Dilorenzo

Associated Press

Published: Monday, April 23 2012 8:55 a.m. MDT

Hollande has said he will push for Europe's hard-fought fiscal compact — designed to limit government overspending — to include more growth measures. While reopening that painful debate could rock the relative calm that adopting the compact has achieved, Hollande's idea is not a radical one. Many economists have expressed concern that Europe is tacking too hard toward austerity, sacrificing all-important growth in the process.

On Monday, German Finance Ministry spokesman Martin Kotthaus resisted any notion that a change of president in France would alter Europe's course.

"We should not now simply let ourselves be thrown off track by daily developments," he told reporters in Berlin. "The road is right; Europe has done its homework."

In the end, Germany may be right: It may be that the times make the president, not the other way around.

"I think that the markets have to realize that the margin of maneuver of any French president is extremely slim," said political analyst Dominique Moisi. "The deficits are huge in France, the rules of the (European) monetary union are very tight. Any president, Francois Hollande or Nicolas Sarkozy, would reintroduce consideration for growth in his economic policy, and I think that ultimately Francois Hollande is a moderate man."

Geir Moulson in Berlin and Catherine Gaschka in Paris contributed to this report.

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