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Apr 29, 2012, 09.02 AM IST | Source: Reuters

France's Hollande says his ideas winning in Europe

FRANCE-ELECTION-HOLLAND:France's Hollande says his ideas winning in Europe

By Daniel Flynn

PARIS (Reuters) - France's Socialist presidential frontrunner Francois Hollande welcomed Germany's call for growth measures on Saturday as a sign Europe was accepting his warnings of the risk of austerity.

Hollande, on course to win next weekend's presidential runoff against President Nicolas Sarkozy, insisted German Chancellor Angela Merkel would eventually accept his proposal to renegotiate a German-inspired budget discipline pact.

In an interview with the Leipziger Volkszeitung on Saturday, Merkel said she was ready to bolster the European Investment Bank (EIB) and use EU infrastructure funds more flexibly - two of the proposals put forward by Hollande to boost growth.

She said however there could be no question of renegotiating the "fiscal compact" signed by 25 of the EU's 27 member states in March. Berlin is also less keen on Hollande's call for joint European bonds to finance infrastructure projects.

"For several weeks, the ideas I propose have been gaining ground not just in France but the whole of Europe," Hollande told French radio, citing recent comments by ECB President Mario Draghi and the leaders of Spain, Portugal and Italy. "Now Merkel...says she is ready to do more for growth."

"Things are moving and they will move even more after the French elections," he said. "A few weeks ago, Merkel didn't even want to hear the word growth, she was only talking about austerity...There will be a renegotiation. There will be a growth pact."

The prospect of a Socialist winning control of France for the first time since Francois Mitterrand left office in 1995 has irked some investors, helping to widen the spread of French bond yields to benchmark German Bunds.

Hollande's pledge to renegotiate the budget pact has also sown fears of a damaging rift at the heart of Europe.

But Berlin has sought to play down differences, emphasising the need for an EU strategy on growth and jobs in the face of rising opposition within Europe to austerity in recent weeks.

WARNS OF JOB CUTS

In an interview published earlier on Saturday, Hollande said labour leaders were warning that companies in France were preparing a round of job cuts after the end of the presidential campaign, during which Sarkozy has done everything in his power to avoid high profile industrial closures.

"Decisions are being prepared which have been postponed. It is not our victory which will trigger redundancy plans after May 6," Hollande told Le Parisien. "We must tell these companies that we will not accept this without reacting."

Sarkozy's failure to meet promises to lower stubbornly high unemployment in the euro zone's second largest economy is one of the main reasons he lags his Socialist rival by around 10 points in polls for the May 6 second round.

He received another blow on Thursday when the jobless rate hit nearly 3 million, its highest level since September 1999.

Sarkozy, whose brash personal style has alienated many conservative voters, became the first incumbent to finish second in a presidential first round vote last week, when Hollande beat him 28.6 percent to 27.2.

National Front leader Marine Le Pen shocked France by finishing third with 18 percent, the far-right party's best showing at a national election.

In an interview with the Journal du Dimanche newspaper, Le Pen predicted Sarkozy's UMP party would crumble if he loses next weekend's runoff, opening the door for the National Front to pick up seats in June's parliamentary elections.

The far-right party has not held a legislative seat since 1986, when it won 35 deputies during a brief experiment with proportional representation.

"There will be a political reconstruction," Le Pen said. "If we get into parliament we will shake everything up. The habits, the dishonourable behaviour, the complicities ... In parliament, my voice will be heard and I hope not to arrive there alone."

Hollande has blamed Sarkozy's fiery anti-immigrant rhetoric for fostering the far-right, which flourished in high unemployment areas.

"The left's real responsibility is not convincing ordinary voters - workers, employees, rural people, even the young - that it was useful to vote for us," he told Le Parisien. "It is to these voters who feel down trodden, who have suffered a lot in the crisis, that I must appeal as a candidate and as president."

With the tone of the campaign becoming increasingly bitter in recent days, as both Sarkozy and Hollande seek to appeal to far-right voters, the Socialist said a head-to-head debate on Wednesday between the two men was likely to be tough.

"To judge by the tone and content of the campaign, the debate will be rough," he said. "I am ready."

(Reporting By Daniel Flynn Editing by Maria Golovnina)

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