Some call him the Ronald Reagan of France; some call him the new Margaret Thatcher. Running on a motto of "rehabilitate work, authority, respect, meritocracy," right-leaning Nicloas Sarkozy won the French Presidency over the weekend. The result was largely expected and French markets were relatively flat today. French bourses rallied nicely in the weeks leading up to the election, likely pricing in the result.
But please excuse us if we hesitate to call this a "revolution" in free market and trade policy just yet. For one thing, it's all relative. Yes, Sarkozy is almost blasphemous in his calls for tax reforms and friendship with the United States. But even a seemingly extreme right-leaning candidate in France is still pretty socialist by US standards.
Sarkozy won 53% of the vote with an 85% turnout and will officially become president on May 16th. Not everyone is ecstatic with the result: threats from various unions ensued, and a few riots broke out across the country along with several hundred torched vehicles.
Sarkozy has drawn up a whirlwind agenda for his first 100 days in office and plans to present big reforms to parliament in July. He's touted everything from renewed friendship with the US to making overtime compensation tax-free to better trade pacts with Europe and Africa.
All of this sounds a little too good to be true. Call us skittish skeptics if you must, but we can't help recall Angela Merkel's ascendancy in Germany just a few years back—complete with overzealous optimism for big pro-market reforms. Most of that never panned out. Any true French "mandate" to defang socialism will be dependant upon elections yet to be held. Parliamentary elections will be held on June 10th and June 17th and Sarkozy's UMP party will need to win the majority in order to make his plans a reality. While the UMP is expected to fare well, it seems very possible no super majority will emerge. Much like today's gridlocked US Congress, where neither party can pass any bills of true significance, France might be entering a quagmire of its own. And anyway, not all of Sarkozy's policies are grand. He's also shown himself to be something of a protectionist, with an anti-immigration stance that has proven very popular among the voting public.
But gridlock in itself could be a good thing. A do-nothing French government is impotent to meddle in Europe's current economic expansion. Either way, Sarkozy's victory is ultimately a positive. French leadership has taken a decided turn for the capitalistic. It may not truly be Morning in France today, but at least it's not Mourning in France.
Here's a smattering of news coverage and opinion on the election:
Sarkozy Claims French Mandate to Push Tax Cuts
By Francois de Beaupuy, Bloomberg
By Editorial Staff, The Wall Street Journal (*site requires registration)
Cheering Crowds Hail Sarkozy's Triumph
By Angelique Chrisafis, The Guardian
Sarkozy Win Comes From Unlikely Corners
By By Jamey Keaten, Yahoo! News
Sarkozy Planning Pro-Market, Anti-Crime Reforms
By Aude Lagorce, Marketwatch
Sarkozy, Rightists Triumph in France
John Ward Anderson and Molly Moore, Washington Post
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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.