The weekend’s election results have thrown the Euro zone’s austerity plans into doubt. France’s Nicolas Sarkozy, and the Greek government were ousted in elections held on Sunday revealing the people’s anger at Austerity.
Sarkozy was defeated by the socialist Francois Hollande, who won by a comfortable margin. He has pledged to find an alternative to the German backed austerity plan. During his victory speech he declared “a new departure for Europe and hope for the world, austerity can no longer be the only option”.
Hollande’s victory will be a bitter disappointment to the German chancellor Angela Merkel who regarded the defeated Sarkozy as a close ally for her push for austerity measures. Hollande has openly said that he will seek to renegotiate the ‘fiskalpakt’ which was signed by 25 countries to stick to austerity measures. This has set the new president on a direct collision course with Merkel who said, “We in Germany are of the opinion, and so am I personally, that the fiscal pact is not negotiable. It has been negotiated and has been signed by 25 countries.”
In Greece the people voted in their droves to oust the encumbered Coalition government. The two biggest parties only received 30% of the vote, a stark contrast to the 80% share when they were elected to power in 2009. A plethora of anti-austerity parties won seats in the countries parliament but no one party received a majority vote. Disturbingly the far right fascist party of the Golden Dawn secured more than 20 parliamentary seats.
Yesterday Antonis Samaras, leader of the conservative New Democracy party failed to form a coalition government he said, “I did whatever I could to secure a result but it was impossible,”. Today will see the turn of Alexis Tsipras, head of Syriza, an acronym for the Radical Left Coalition to attempt to form a government.
Hannes Swoboda, leader of European Socialists and Democrats, said yesterday: “This radical austerity policy has pushed Europe into recession and brought about the explosion in unemployment. It has led to the votes for extremists in Greece and the upsurge in the National Front in France.” “The process of stabilisation must be based on a growth pact to stimulate investment and job creation”.
The inability to form a government in Greece and the growing discontent with austerity measures right across Europe has left investors uneasy and the markets in a state of confusion.The political uncertainty is only serving to increase fears that Greece could exit the Euro and France may abandon its fiscal policies; situations that will weaken the Euro even further.
Situations that will weaken the Euro even more.
The Pound to Euro exchange rate is currently trading at 1.239
The Pound to US Dollar exchange rate is currently trading at 1.613
The Euro to US Dollar exchange rate is currently trading at 1.301
The Euro to Pound exchange rate is currently trading at 0.806