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François Hollande, the Socialist Party candidate for this year's French presidential election, which will be held on Sunday. Yoan Valat / EPA
François Hollande, the Socialist Party candidate for this year's French presidential election, which will be held on Sunday. Yoan Valat / EPA
François Hollande, the Socialist Party candidate for this year's French presidential election, which will be held on Sunday. Yoan Valat / EPA

How will Hollande handle France?

Opinion polls are anointing the Socialist candidate as president, and Nicolas Sarkozy, the incumbent, apparently needs a miracle to win the election. But disquiet exists in important corners over Mr Hollande's tax-and-spend plans.

Day after day, as the French presidential election entered its formal stage with regulated airtime and repetitive broadcasts of the candidates' self-serving clips, viewers heard the mantra of the socialist favourite, François Hollande: "Money will be put in its place. As a servant, not the master."

But what happens the day after Mr Hollande, a seasoned party administrator with no experience of government office, becomes head of state - as the opinion polls relentlessly say he will - could be another matter.

How does he ensure it is not a Black Monday, on which money shows its more masterly side and, in the markets' harsh judgement, delivers a resounding thumbs down to his tax-and-spend programme?

It has happened before. Stocks slumped by 20 per cent and the value of France's pre-euro currency, the franc, fell sharply after another François of the French left, Mitterrand, became president in 1981. Trading was briefly suspended.

Thirty-one years on, there are differences as Sunday's first round of the 2012 election approaches.

Mr Mitterrand had to be prodded by bitter experience into moderating his socialist manifesto. Mr Hollande has learnt in advance from recent political history, notably the early successes of Tony Blair's New Labour project in Britain, of the need to convince voters that he is a responsible man to be trusted with the nation's finances.

Even so, the rhetoric is combative, and some of the means promised by Mr Hollande as a route to his chosen end cause deep concern to conservative analysts. Throughout Europe, years of self-indulgence have led to austerity programmes and, in particular, lower spending ambitions. Mr Hollande promises pretty much the opposite.

It would take a generous view of current market stability to suggest that 1981 was a more perilous time than today to be embarking on a programme of artificially fuelled growth.

Mr Mitterrand's own learning curve inspired a major about-turn, with wages frozen and concessions made to employers, early in a presidency with a communist participation that had the militant left salivating. As his policies mellowed, he found the markets more receptive, to the extent that they responded favourably when he won a second mandate.

But in troubled times for the euro, and indeed for a French economy that lost its coveted triple-A credit rating in January, Mr Hollande's recipe for recovery is unpalatable for many decision-makers.

A key campaign pledge is to renegotiate the strict financial package that Mr Hollande's presidential rival, Nicolas Sarkozy, laboured so hard with Angela Merkel, the German chancellor, to produce and which, together, they commended to euro-zone partners as essential if the beleaguered single currency was to be saved.

But his dim view of the Merkel-Sarkozy treaty translates into France rejecting the "golden rule" requiring each country to limit its deficit to a maximum of 3 per cent of GDP or incur automatic sanctions - even though Mr Hollande claims he can reach that target next year and eliminate the budget deficit by 2017.

He stresses the importance of continued Franco-German collaboration, but Mrs Merkel is alarmed by his threat to a unified quest for euro-zone financial discipline.

Unrepentant, and mindful of his party's ambition to follow presidential triumph by taking control of parliament in June, Mr Hollande told the German economic newspaper Handelsblatt bluntly: "If the treaty contains no measures for growth, I could not support its ratification by the National Assembly … I have met several European heads of state and many are not satisfied with the economic situation. I am not isolated."

Beyond his quarrels with his rival's euro policies, Mr Hollande has plans to create 150,000 jobs for young people in poor areas and 60,000 teaching posts during his five-year term of office. And then, of course, there is the eye-catching, bash-the-rich tax of 75 per cent on annual incomes over €1 million (Dh4.8m).

In French football's top-tier Ligue 1, Paris Saint-Germain's manager, Carlo Ancelotti, and his €42m Argentinian midfielder Javier Pastore earn more in a month, and it is debatable how many would care to follow Pastore's lead and declare: "If I have to pay it, I will."

It is bad enough in many French eyes that top footballers will be driven away to other leagues. It would be worse still if a tax designed to make the best-off take their share of the pain not only produced relatively little revenue but deterred investment and therefore job creation.

The French centre-right talks up Mr Sarkozy as a more prudent manager of money. And right-wing commentators argue that Mr Hollande's credibility, as viewed by middle France, has been severely damaged by the shrillness of his attacks on the financial sector.

"To the moderate mass of French, Hollande started to look like just another old socialist of the sort most of the rest of Europe had done [away] with shortly after the fall of the Berlin Wall," Simon Heffer wrote in The Connexion, a monthly newspaper for English-speakers in France.

But Mr Heffer was unable to offer much hope that this "moderate mass" carried sufficient electoral clout to keep Mr Hollande out of the Elysée. Indeed, the polls would have to be spectacularly wrong, or Mr Sarkozy capable of making an extraordinary comeback, to stop a Socialist victory on May 6, when the two men are expected to slug it out in a second-round decider.

Once in power, assuming he does win, Mr Hollande will have his work cut out keeping at bay Jean-Luc Mélenchon, whose far-left programme - including even greater tax hikes for the rich, to 100 per cent at €360,000 a year, and an increase in the minimum wage from €1,398 to €1,700 a month - makes Mr Hollande seem restrained. And Mr Mélenchon may pick up enough votes on Sunday to embolden him in his declared aim of proving a constant irritant to the more moderate left winger who takes office.

Yet amid lingering public anger towards the bankers and speculators whose greed or incompetence is at least partly blamed for economic crisis, Mr Hollande's approach ticks the right boxes for many voters. His prospects of finishing Sunday's first round ahead of Mr Sarkozy have strengthened if the most recent polls accurately reflect public opinion; the gap in second-round voting intentions, already significant, now suggests a landslide.

By no means all observers expect financial turmoil. "My own guess is that once he is in office, the markets will be fine," said Nick Hewlett, a professor of French studies at Warwick University in the United Kingdom and the author of an acclaimed book, The Sarkozy Phenomenon.

"There may be a bit of a wobble, but it won't be Mitterrand and 1981 all over again," he added. "There has been talk of companies relocating, but I see no convincing evidence. France remains the world's fifth-strongest economy on most measures, and while business leaders tend to see Sarkozy as a good thing, I don't think Hollande's programme is one that really frightens them."

Jacques Reland, the left-of-centre French head of research at the Global Policy Institute in Paris, agrees.

"The very high tax rate would affect very limited numbers who'd probably find ways round it," he said. "It is more of a political measure than anything. It may be bad for football, but not really for the economy. And I honestly believe the Germans are quietly impressed that Hollande is a steady character, a man of his word, not constantly changing like Sarkozy."

For Mr Sarkozy's supporters, the socialist candidate's policies make economic nonsense and threaten European stability. "Day after day he says he will not respect France's commitments," said François Fillon, the prime minister. "This is a real menace to the single currency, which remains in extreme danger."

Mr Fillon's concerns, it may safely be assumed, were also in the thoughts of owners of 50 or so of France's greatest fortunes who assembled for lunch at the plush Hôtel de Crillon on the Place de la Concorde just before Mr Sarkozy addressed a huge election rally five days ago.

The satirical newspaper Le Canard enchainé reported on the event with customary mischief but stopped short of speculating on how many of these powerful citizens voiced fears that France's economy could be about to suffer a fate equivalent to that of Marie Antoinette when she climbed the scaffold, just across the square, for her date with the guillotine in October 1793.

business@thenational.ae

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