8:00pm UK, Monday May 07, 2012

Germany's leader says the EU fiscal pact is "non-negotiable"

French President-elect Francois Hollande spent the day with his transition team - as the problems he faces in his anti-austerity drive were thrown into sharp focus by Germany.

He was warned there was no question of unpicking an EU "fiscal treaty" agreed last December.

German Chancellor Angela Merkel told reporters: "We in Germany, and me personally, are of the opinion that the fiscal pact is non-negotiable."

That suggests EU leaders will attempt to agree a non-binding protocol on economic growth, which Mr Hollande believes is missing from the current approach to the crisis.

There is unease among Mrs Merkel's Christian Democrats about what Mr Hollande's centre-left campaign pledges of growth and state spending mean for efforts to contain deficits in the eurozone.

With a week to go before his inauguration as president, the 57-year-old victor arrived at the Socialist party headquarters in Paris where he was greeted by cheering supporters.

Mr Hollande said: "The plan for today is to work. Even if the handover isn't yet done, that'll come with time, we're still fixing it.

"I've got to be prepared. I said I was ready, now I really have to be."

His aides said they reviewed how he may pitch "the priority for growth in Europe" to Mrs Merkel.

The two leaders will meet for the first time next week in Berlin to relaunch the Franco-German partnership that lies at the heart of the European Union and the euro.

Mr Sarkozy, who formally hands over power on May 15, was fulfilling his obligations by hosting the President of the Ivory Coast at the Elysee Palace.

He also struck a conciliatory note by inviting his successor to attend VE Day celebrations in Paris on Tuesday.

As well as the eurozone crisis, there are many other contentious issues in Mr Hollande's in-tray.

He will have to explain his plan to remove French troops from Afghanistan a year earlier than planned to a Nato summit.

And he will start work on trying to balance the budget deficit, while also funding tens of thousands of new public sector jobs.

Sophie Pedder from The Economist told Sky News: "The great worry is that the growth forecast on which Francois Hollande has based his reduction of the deficit is very optimistic."

Mr Hollande won 51.6% of the vote in the presidential run-off, unseating Mr Sarkozy after a fractious campaign in which rising unemployment and the faltering economy were the key battlegrounds.

After hearing the news in his political power base of Tulle, Mr Hollande travelled to Paris to address his supporters in the symbolic heart of revolutionary France.

"In all the capitals... there are people who, thanks to us, are hoping, are looking to us, and want to reject austerity," he shouted above the din.

"You are a movement lifting up everywhere in Europe, and perhaps the world."

http://news.sky.com/home/world-news/article/16223707