May 05, 2012, 12.10 PM IST
Two major European nations, Greece and France are ready for elections. While Greece will hold its parliamentary elections, France will vote for the second round of presidential elections. The battle between Francois Hollande and Nicolas Sarkozy is very close, with Hollande taking a slight lead in the pre-poll surveys.
In an interview with CNBC-TV18, James Goundry, Country Analyst, IHS Global Insight talks about the presidential race and its impact on the Euro zone as a whole. Goundry picks Hollande over Sarkozy and believes that if Hollande wins, he will try to balance the budget by 2017.
Below is the edited transcript of his interview with CNBC-TV18. Also watch the accompanying video.
Q: Let me start by asking you that Francois Hollande has given a very tough fight to President Sarkozy. He seems to be ahead right now. How do you think this will turn out on Sunday?
A: It looks as if it's going to be a victory for Hollande, people are binding the word miracle around now if Sarkozy is going to win and I think that’s pretty accurate. All the indications suggest it’s going to be a relatively easy win for Hollande on Sunday.
Q: If it's going to be a relatively easy win then the next question to you is how will or what do you expect will be the changes to France’s economic policy if Francois Hollande did come to power?
A: It's important to bear in mind that Hollande has promised to balance the budget by 2017, which is only one year later than Sarkozy was saying he would do it.
What we are going to see is changes in the way he aims to achieve this, rather than any grand change in his overall approach to economic policy. We are likely to see a shift towards a greater tax burden on the wealthy. We are likely to see a greater burden on big businesses and also alleviating some of the taxes on the poor in society.
With regard to Europe, what we are likely to see is him pushing for a stronger emphasis on growth at the EU level. He has made it very clear that’s what he is going to be pushing for.
Q: There are two or three issues that I would like your views on with regards to what Hollande’s position is likely to be and what impact it’s going to have. First, let’s start with the sweep of austerity that’s driving across Europe and I am keen to know what Francois Hollande’s position is on that austerity? Is he going to be in favour of it or not because France has been one of the key countries along with Germany that’s pushed for that austerity in the periphery?
A: I think it’s fair to say Hollande is going to be in favour of continuing austerity. Yes, balancing the budget is a priority for Francois Hollande. I think what he is going to try and change is the way they do that and the emphasis they place on growth.
Francois Hollande is not just about austerity, it’s about getting growth to return to the Eurozone. It’s about having measures to create more growth, which will in turn help get rid of the budget deficit. That’s what he is going to insist on at the European level. He is also going to take steps to achieve that at the national level as well.
Q: How is that growth going to come about because we have seen some of the data coming out of Europe and it’s not just the periphery, the core is getting impacted as well. The data both on Germany and France seems to be getting weaker. What impact do you think Hollande’s policies will have on the growth prospects of France itself?
A: I am not an economist, so I am not best placed to answer that question. But, according to his own estimates he will manage to improve the prospects in the country very well of course. But, most of the consensus seems to be that his estimates are over ambitious.
Q: The relationship between France and Germany has been the driving force of the attempts towards recovery in Europe. If Hollande were to come to power, how is it going to impact the France-Germany equation?
A: Yes, I think it has to. I mean there has been a lot of speculation in the press that Hollande and Merkel might come to clash over euro zone issues. But, I think France and Germany is going to continue to be the central force in the euro zone and in the European Union.
Its essential that they get on and I think that Hollande is a pragmatic Pro-European politician. He is going to cooperate with Germany and the others in the euro zone and beyond to make sure that the euro zone survives and the European Union (EU) gets out of the crisis it is facing at the moment.
I think Merkel is ultimately extremely pragmatic. I believe, they will both be very keen to work together. Yes, there might be initial disagreements. There will almost certainly be negotiations that might become heated and somewhat difficult. Finally, I am fairly certain they will come to an agreement.
Q: Is Hollande likely to back the fiscal treaty that the EU nations are expected to agree upon over the course of this year at least because he seems to have suggested growth clauses that need to be included in that treaty or else he won't back it?
A: I think he has actually promised to renegotiate the fiscal treaty. That’s probably unlikely. Not least because of the political capital that was expended by many European leaders to negotiate a treaty in the first place. Also it hasn’t been ratified by everyone but it has been ratified by a couple of countries.
News driven market breaks previous high of 6212; Nifty in uptrend, may surprise on upside if actual election results are supportive
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