Political uncertainty and disappointing data in Europe raised fears the Eurozone could struggle to push through austerity measures and may stay in recession until late in the year.
The Dutch prime minister resigned from office on Monday after Dutch officials failed to agree on budget cuts, while France’s Socialist presidential candidate Francois Hollande, who promised to renegotiate a European budget pact, won in the first-round of elections. The third place win by Marine Le Pen shocked internationals as this showed growing support for xenophobic strategies, which undermines the fabric of a single european market.
Adding to that, the euro zone’s business slump deepened at a far faster pace than expected in April.
Financial markets have been unnerved by the rise of Francois Hollande, previously best known as the partner of Ségolène Royale, French president Nicolas Sarkosy’s defeated opponent in the last French election.
The economy is at the centre of the election campaigns in France. Although far from the plight of peripheral Eurozone countries, it is struggling with weak economic growth, 10% unemployment, straining public finances and a population unwilling to give up on cherished pensions and welfare benefits.
Both Hollande and Sarkozy advocate a financial transaction tax, which would have a far bigger impact on the City of London than on the Paris bourse.
We await for round 2!
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