The French Presidential election saw a socialist returned to power for the first time in 17 years. Francois Hollande ran on a platform of encouraging jobs and growth as a better alternative to austerity for debt reductions (a bit of free political punditry: this will be the message that all ruling parties try to sell to the electorate, going forward). Mr Hollande will not abandon austerity measures, but plans to explore other alternatives as a mechanism to drive up revenue, boost jobs and growth and pay down the deficit – you can’t really argue with that now, can you?
One early concept that is being rekindled by the French is the idea that the EU should issue Eurobonds. The problem that has bedevilled Greece, then Ireland and Portugal was that as the investment community became concerned about these nations’ abilities to meet obligations on existing debt, the yield on borrowing went up, making borrowing more costly and a default more likely. The idea behind a Eurobond is that it would be backed by the wider EU or Eurozone group and therefore would be subject to a much better credit rating which would keep yields in check. However, the Germans have again signalled their discontent with such a move. A junior German minister described the idea as the "wrong prescription at the wrong time".
The French President received a similar rebuff to re-airing the idea of a financial transaction tax of 0.1% per transaction for all transactions within the EU when meeting with UK PM, David Cameron, in a meeting prior to the G8 summit. The UK remains opposed to the idea since 80% of the tax would be raised in London – European solidarity only stretches so far. It seems that the idea that such a tax could be used to off-set UK payments to the EC has not dawned on the powers that be in Whitehall.