* Sarkozy says Socialist plan would lose investor confidence
* Hollande accuses Sarkozy of scaremongering
* Polls show Hollande comfortably defeating Sarkozy
(Adds Obama, other details)
By Catherine Bremer
PARIS, April 12 (Reuters) – Socialist presidential
frontrunner Francois Hollande accused Nicolas Sarkozy on
Thursday of encouraging market speculation for electoral gain,
after the president said victory for Hollande could spur a
crisis of confidence in France.
The exchange came as another opinion poll by the LH2 agency
showed Hollande winning the coming duel with Sarkozy.
With tensions between the two rivals mounting 10 days before
the first presidential election round on April 22, Sarkozy has
warned that markets could take flight from French securities if
Hollande wins power in a May 6 runoff.
“The people do not want to have some kind of diktat imposed
on them from outside, so when Nicolas Sarkozy tries to call the
markets to come to his rescue, that is not in the country’s
interest,” Hollande said on France 2 television.
“What is in France’s interest is fighting speculation, not
encouraging it under the pretext of helping him in the
presidential election.”
Sarkozy – whose main asset in a close-fought duel against
the popular but inexperienced Hollande is his record of managing
Europe’s debt crisis – has increasingly played on fears that
France under a left-wing government committed to raising
spending could lose investor confidence.
Unveiling his manifesto last week, he said Hollande would
lead France towards the fate of Greece or Spain.
Hollande is running on a tax-and-spend programme which he
says would bring France to a balanced budget a year later than
Sarkozy’s manifesto. Economists say Hollande’s spending plans
would need to be scaled back to keep France’s efforts to reduce
its deficit on track.
The targets are seen as crucial to Paris retaining investor
faith at a time when the euro zone debt crisis refuses to abate.
“If we start hiring civil servants, if we will start
spending again, if we throw the pension reform into question,
it’s not a risk that interest rates will rise, it’s a
certainty,” Sarkozy said on Wednesday.
“It would immediately set off a crisis of confidence.”
BATTLE FOR MARKETS
In a research note, UBS Global Asset Management analysts
highlighted the weakness in France’s public finances, saying the
country no longer deserved to be considered part of the euro
zone’s core countries, a category that includes Germany.
Nomura chief political analyst Alastair Newton said that
deepening market concerns about Spain and Italy could quickly
spill over onto France if Hollande wins May’s final vote.
France, which has not balanced a budget since 1974, lost its
AAA credit rating with Standard & Poor’s in January and its
public finances are still under scrutiny by market analysts.
“A ratings agency downgrade is a high probability, though
that is not the end of the world, as soon as Francois Hollande
would move on Nicolas Sarkozy’s pension reform,” said Newton.
Hollande is running as many as 10 percentage points ahead of
the incumbent in opinion polls for a May 6 deciding round,
although Sarkozy recently nudged ahead in voter surveys for the
first-round vote between 10 candidates.
An LH2 poll published on Thursday showed Hollande winning a
runoff with 55 percent of the vote to 45 percent for Sarkoy, and
said the number of people whose voting plans were set in stone
was now just short of 90 percent.
Recent polls suggest the modest gains Sarkozy made in the
last couple of weeks are now petering out.
Sarkozy’s effort to persuade voters he is the best man to
lead an economic recovery suffered a setback this week when a
survey showed growth stalling.
He spoke on Friday to U.S. president Barack Obama, who also
faces an election this year, about international issues.
“Busy times,” said Obama, who went on to say he admired his
counterpart’s battle for re-election, according to an official
readout of the video conference call between the two men.
To which Sarkozy replied in English: “We will win. You and
me.”
(Additional reporting by Brian Love, Alexandria Sage, Vicky
Buffery, Geert de Clercq and Jean-Baptiste Vey; Editing by
Andrew Roche)
