The French President-elect, Francois Hollande, received a double warning from markets and Berlin yesterday after promising to end the “all-austerity” approach to the European financial crisis.
Mr Hollande scarcely had a chance to savour his victory in Sunday's presidential election before jittery markets and a seemingly inflexible statement from Germany reminded him of obstacles to his proposed new European agenda for “hope” and “growth”.
France's first Socialist President since 1995 will visit the German Chancellor Angela Merkel to outline his growth plans next Wednesday, the day after his inauguration in Paris.
Ms Merkel said yesterday that she expects to work “intensively and well” with Mr Hollande after he defeated her close ally Nicolas Sarkozy by 51.6% to 48.4% in the second round of the presidential election.
But Chancellor Merkel's spokesman appeared to slam the door to any “renegotiation” of the EU treaty on fiscal discipline finalised in Brussels in March.
A reopening of this treaty, to add a protocol on capital spending to promote growth, was one of the main planks of Mr Hollande's campaign.
The Chancellor's spokesman, Steffen Seibert, said: “It is not possible to renegotiate the budgetary pact which has already been signed by 25 out of 27 EU countries.”
A head-on collision between Ms Merkel and Mr Hollande on this point can probably be avoided.
The President-elect has already hinted that he might accept a compromise in which an untouched fiscal treaty would be balanced by a new text on policies to kick-start growth.
He will send a letter outlining his ideas to all EU leaders in the next few days. The true confrontation with Berlin may come over the contents of any new growth treaty. Ms Merkel's spokesman said yesterday that “growth-promotion” should mean labour-market reforms on the German model, not “deficit spending”.
Among other things, Mr Hollande wants the European Central Bank to issue new multibillion-euro loans — or euro bonds — to fund Keynesian-style infrastructure programmes, such as rail, road and renewable energy projects.
Several other European leaders favour this idea but Berlin is, so far, opposed.
The market jitters yesterday were, perhaps, more of an amber warning for Mr Hollande than an outright red light.