23/04/2012 16:34
Markets reacted nervously on Monday to the socialists’ first-round victory in France’s presidential election, as the eurozone crisis claimed another victim on Monday with the collapse of the Dutch government.
Analysis of Francois Hollande’s early lead – and the strategy he and Nicolas Sarkozy might adopt towards the far-right National Front’s unexpectedly large support – came amid a flood of statistical data underlining the tenacity of the eurozone’s problems.
The European Union’s statistics office said that although the 17 member states of the eurozone had reduced their deficits from 6.2 per cent of gross domestic product in 2010 to 4.1 per cent in 2011, overall debt still rose 1.9 percentage points to 87.2 per cent of GDP – the highest since the euro was created in 1999.
In The Netherlands, Mark Rutte, prime minister, will tender his government’s resignation at a meeting with Queen Beatrix later on Monday, clearing the way for elections.
Market concerns across Europe centred on the fact that action to deal with the eurozone crisis, in which France has played a crucial role, could be complicated if Mr Hollande achieved victory in next month’s decisive second round. To do so, he would have to win votes from those cast for defeated first-round candidates, notably the 18 per cent cast for Marine Le Pen, the National Front candidate.
An opinion poll on Sunday showing Mr Hollande’s lead over Mr Sarkozy narrowing to 8 percentage points from 12 percentage points also suggested that almost all those who backed Jean-Luc Melenchon, of the LeftFront – who won 11.1 per cent of the vote – would shift their support to Mr Hollande in the second round.
A handful of Le Pen supporters would do likewise, while 60 per cent said they would back Mr Sarkozy.
France’s financial markets came under pressure and French borrowing costs rose, with the spread between yields on French and German 10-year government bonds reaching 143 basis points, almost the highest since January.
The CAC 40 benchmark French stock market index dropped 1.2 per cent.
Meanwhile, the Netherlands was thrown into political crisis after far-right politician Geert Wilders ended his majority in parliament by withdrawing his support for budget cuts aimed at meeting EU deficit limits.
The move has raised uncertainty over whether the Netherlands will be able to cut its projected 2013 budget by the €15bn needed to meet the EU target. Yields on Dutch 10-year bonds rose 9 basis points to 2.41 per cent.
Broader markets were also reflecting investor concerns, with FTSE Eurofirst 300 index stocks down 1.8 per cent as financials were hit. Spain’s Ibex 35 index fell 2.8 per cent to stand just half a percentage point above its lowest close in more than nine years. S&P 500 futures pointed to Wall Street retreating 1 per cent at the opening bell.
Analysis of Francois Hollande’s early lead – and the strategy he and Nicolas Sarkozy might adopt towards the far-right National Front’s unexpectedly large support – came amid a flood of statistical data underlining the tenacity of the eurozone’s problems.
The European Union’s statistics office said that although the 17 member states of the eurozone had reduced their deficits from 6.2 per cent of gross domestic product in 2010 to 4.1 per cent in 2011, overall debt still rose 1.9 percentage points to 87.2 per cent of GDP – the highest since the euro was created in 1999.
In The Netherlands, Mark Rutte, prime minister, will tender his government’s resignation at a meeting with Queen Beatrix later on Monday, clearing the way for elections.
Market concerns across Europe centred on the fact that action to deal with the eurozone crisis, in which France has played a crucial role, could be complicated if Mr Hollande achieved victory in next month’s decisive second round. To do so, he would have to win votes from those cast for defeated first-round candidates, notably the 18 per cent cast for Marine Le Pen, the National Front candidate.
An opinion poll on Sunday showing Mr Hollande’s lead over Mr Sarkozy narrowing to 8 percentage points from 12 percentage points also suggested that almost all those who backed Jean-Luc Melenchon, of the LeftFront – who won 11.1 per cent of the vote – would shift their support to Mr Hollande in the second round.
A handful of Le Pen supporters would do likewise, while 60 per cent said they would back Mr Sarkozy.
France’s financial markets came under pressure and French borrowing costs rose, with the spread between yields on French and German 10-year government bonds reaching 143 basis points, almost the highest since January.
The CAC 40 benchmark French stock market index dropped 1.2 per cent.
Meanwhile, the Netherlands was thrown into political crisis after far-right politician Geert Wilders ended his majority in parliament by withdrawing his support for budget cuts aimed at meeting EU deficit limits.
The move has raised uncertainty over whether the Netherlands will be able to cut its projected 2013 budget by the €15bn needed to meet the EU target. Yields on Dutch 10-year bonds rose 9 basis points to 2.41 per cent.
Broader markets were also reflecting investor concerns, with FTSE Eurofirst 300 index stocks down 1.8 per cent as financials were hit. Spain’s Ibex 35 index fell 2.8 per cent to stand just half a percentage point above its lowest close in more than nine years. S&P 500 futures pointed to Wall Street retreating 1 per cent at the opening bell.
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