Hollande's Victory Heralds European Fightback Against Austerity

08/05/2012 08:31 BST | Updated 07/07/2012 10:12 BST

Francois Hollande's victory in the French presidential elections constitutes a major step forward in the struggle against austerity across Europe. Its immediate effect is the smashing of the pro-austerity consensus of the political classes, responsible for strangling the life out of Europe's economies over the past four years and resulting in a deepening social crisis which for increasing numbers of people caught at the sharp end looked to have no end in sight.

Finally, it is anticipated, the government of a major European economy will break with the markets and the banks to establish an economic policy configured around the needs of the majority of its people. This in itself will constitute a significant political departure from the steady rightward shift that has taken place throughout Europe in response to the global economic crisis.

Hollande's first priority, if his election is to result in the impact millions across Europe are hoping it does, is to renegotiate the fiscal bailout package agreed by Sarkozy and Merkel last year - or in truth decided by Merkel and supported by Sarkozy. Merkel and Germany's stranglehold over EU fiscal policy has to be broken, resulting in a relaxation of the rules governing the role of the ECB as lender of last resort. In other words, Merkel must be made to understand that the German economy can no longer have it both ways - the major beneficiary of fiscal union during the boom years but reluctant to use its strength to provide desperately needed fiscal stimulus to peripheral EU economies as they continue in freefall during the bad. The consequent economic, political and social costs will not be contained within national borders and will inevitably hit Germany. This is despite the fact that the German economy has been able to weather the storm thus far due to the stimulus spending of the US and Chinese governments increasing demand for German exports at a time when the value of the euro is at a historic low.

The shot in the arm which the election of Hollande has given to social democracy across Europe will strengthen a move towards anti-austerity. The Greek elections, held in the same week as the French presidential elections, have seen the left make significant gains in support, with a coalition of anti-austerity parties forming the next government possible at time of writing. This places further pressure on Merkel to change tack. Increasingly, she will now find herself isolated in Europe but under pressure at home to continue taking a hard fiscal line in the short term interests of the German economy. How this will play out is unknown at this stage, but it does give the German left an opportunity previously denied them to advance an alternative. The threat from the far right across Europe demands nothing less.

Meanwhile, here in the UK the just-passed local elections have also registered a swing away from austerity, as the argument in favour of investment and growth resonates in response to the Coalition's mismanagement of the economy, leading to a double dip recession. Boris Johnson's victory in the London mayoral elections notwithstanding, Labour's message of growth and investment emerged considerably strengthened. Overall, however, the real winner of the local elections was anti-politics, reflected in record low turnouts. Indeed, what is Boris Johnson if not a poster-boy for anti politics, an upper class buffoon whose political incoherence and shambling demeanour has succeeded in characterising him as a figure of fun rather than a serious political force?

In Bradford the resurgence of RESPECT continued with five councillors elected, in the process unseating the incumbent leader of the hitherto Labour controlled council. Galloway's outstanding by-election victory in March came as a massive anti-austerity and antiwar shot across the bows of the three mainstream parties, particularly a Labour Party which under Ed Miliband, while making progress in shedding the baggage of Blairism, still has a distance to travel. This is illustrated by the unconscionable decision of Scottish Labour to open talks with the Tories on the possibility of forming coalitions to seize control of key councils from the SNP.

If anything was designed to demoralize any last vestige of support which Labour in Scotland has retained after years of decline, this is it. It will inevitably result in a strengthened SNP instead of the opposite, which is why Miliband must intervene to prevent what will be certain political disaster for Labour in Scotland.

The Europe-wide rejection of austerity that is rapidly gathering momentum is not only based on moral outrage at its brutal consequences for the vast majority of working people, measured in deepening immiseration and despair, while the rich remain relatively untouched. The rejection of austerity is also based on the simple fact it isn't working and will never work. This is no surprise, as the economic nostrums upon which austerity is predicated are false. Taking steps that will remove demand out of an economy in which the underlying problem is the lack of demand is a recipe for economic Armageddon, leading to its social equivalent. This was as true in the 1930s as it was in the 1980s as it is now. In a time of recession choices have to be made about whose side you are on. The Tories are a party of the rich, by the rich, and for the rich. This is the reason for their existence and drives their entire economic and social policy.

Social democracy, meanwhile, pitched to the right in response to the seeming inevitability and immutability of neoliberalism over the past three decades, is now showing signs of returning to its role as a shield protective working people from the crushing impact of untrammelled capitalism. The scenes of celebration across France that met Hollande's victory were evidence of this, with the French people registering a resounding victory over the power exercised by the banks, financial markets, and the rich not only in France but across Europe.

Austerity is on the back foot. People have awoken to the fact there is an alternative. It's called social and economic justice.