June 18, 2012
Francois Hollande has said he wants to follow in the footsteps of his namesake Francois Mitterand – he has to and will do better.
In the nondescript town of Tulle, far from the glamorous Paris ballroom where his rival had just conceded, Francois Hollande gave his victory speech. He said he was proud to give people hope again, referring to his predecessor, the only other Socialist President of the Fifth Republic, Francois Mitterand. The reaction of the left wing press across Europe, hitherto bereft of a hero and sick of writing editorials condemning the same austerity in different languages, showed similar elation to when Mitterand himself came to power in 1981. The Guardian called it “a stunning victory, not just for himself… but for Europe too”.
Before Mitterand was elected, the last genuinely socialist leader of France (excepting a series of loose coalitions that rose and fell with the tides during the 1950s) was Leon Blum, elected in the depths of the Great Depression in 1936. Both immediately set about implementing classically socialist policies but were forced into dramatic u-turns within a year of their election for very similar reasons. Financiers, still skittish from the Wall Street Crash, looked at Blum’s Paris and saw Moscow, panic selling of French government bonds and causing a run on the franc so damaging that France was forced off the gold standard. Mitterand saw a rapid exodus, not just of capital but of capitalists, as the highest earners in France rapidly relocated (mostly to Margaret Thatcher’s Britain). Blum was forced into a pause in his policy agenda. The pause became a wait and Blum resigned a year later to be replaced by the centrist Camille Chautemps, shortly followed by the conservative coalition of Eduard Daladier. Mitterand hung on to power until 1995 but found himself in “cohabitation” governments with a conservative majority in parliament. He never attempted to re start anything resembling a truly progressive agenda.
As a young government advisor, Francois Hollande saw Mitterand’s shackling. He may be worried that history is about to repeat itself. Although the Sarkozy campaign’s dire warnings of another run on French bonds in the wake of Hollande’s election has proved false, industry sources suggest that this may be because Hollande’s victory seemed so assured for so long that the market had already adjusted (downwards). In addition, France’s national debt could hardly be more distrusted by the international markets at this point anyway.
But reports are already rife of the richest in France are already eyeing up the more 1% friendly climes of London. Some major banks preparing to enact contingency plans to relocate top executives to states with a friendlier tax band. While the bond markets may have already adjusted, some investors suggest Hollande might be living on borrowed time. It is one thing for the markets to adjust themselves to the man but a class of investors bred on the doctrine of austerity may find it more difficult to adjust to his policies taking effect. Read more of this post