Is Europe voting against austerity or is Europe voting against tax rises?

By Tim Montgomerie
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Another election result and another bad result for the incumbent.

Angela Merkel's CDU won just 25% of the vote in the huge laender of North Rhine Westphalia.

The Wall Street Journal warns it readers not to get excited about the result. Before 2005 NRW was a stronghold of the opposition SPD, it says. It also notes that, unlike in France, the big German parties are largely agreed about the need for some sort of austerity (although they're not agreed on pace and scale).

The results across Europe are largely being read as votes against austerity. I've also argued that they are votes against the €urozone. But one under-discussed factor might be that they are also votes against higher taxes. New York Times commentator David Brooks made this point within his regular slot for US National Public Radio.

I'm not saying that voters aren't also protesting against spending cuts but we know in Britain that it's been tax rises (on VAT, pasties, charities, pensioners) that have caused Cameron and Osborne their biggest political problems. Deeper cuts in spending aren't going to be popular (think of a one billion spending cut as equivalent to taking £1,000 off one million people) but one way in which centre right parties might protect themselves from the anti-incumbency mood is to limit the tax rises and focus on trimming the EU's bloated public sectors. As John Redwood has argued, we are at the tax saturation point and voters have had enough.

Marina Yannakoudakis MEP: The lesson of the French and Greek elections is that the Fiscal Compact is defending the indefensible

Marina Yannakoudakis is a Member of the European Parliament for London. Follow Marina on Twitter.

I recently took part in a debate on the French TV channel France 24. The subject was austerity and the French Presidential election. I suggested, as much as a joke as anything, that as a London MEP I was looking forward to welcoming those French who wished to avoid François Hollande’s 75% millionaire tax. The socialist economist who was participating in the debate practically jumped out her chair. “The French people are not going to leave France because of a small increase in tax,” she rasped gallically.

While upsetting a French socialist is the mark of a job well done for a Conservative MEP, I wonder whether the economist might ultimately be proven right. Not because I believe that punitive taxes won’t lead to an exodus of Frenchmen to London, but because I don’t believe that the European Union will allow Hollande to divert from its austerity agenda.

I understand why the French, the Dutch and the Greeks (about which more later) are opposed to austerity. France’s deficit is smaller than the UK’s with the Netherlands even enjoying a small surplus. France has not been forced to take quite the same drastic action as the UK government to shore up its economy. However, Sarkozy tried to manage the crisis by lowering the cost of employment: making it easier to fire workers and introducing pension reform. The unions who backed Hollande will demand a volte face on labour reforms and France’s spiralling pension costs can only see the country’s deficit rise.

Austerity-sceptic Hollande wins in France --- and anti-austerity parties gain in Greece

By Tim Montgomerie
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BIFF! France has elected a Socialist president on a massive turnout (81.5% certainly shames Britain) - ending Nicolas Sarkozy's rule and also ending a run of right-of-centre victories across Europe. Some say '75% tax-rate Hollande' will be more moderate than on the campaign trail but IDS has warned of a exodus of French entrepreneurs quitting Paris for London. The Socialist candidate wants to re-negotiate the fiscal pact to place more emphasis on growth.

KA-POW! But will France provide the most important election of the day? Greece has also voted and the ruling coalition parties have suffered slumps in support. Anti-austerity parties have prospered in their place. It is far from clear that a stable coalition can emerge from the election outcome and form a government that is able to fulfil commitments made to the IMF.

DING-DING! Two weeks ago the Dutch coalition also collapsed after Geert Wilders looked at opinion polls opposing further EU-mandated spending cuts and withdrew his support from Mark Rutte's minority administration.

BOOM! Unemployment among Spain's youth hit 51.1% earlier this week. 17.4 million people are now out-of-work across the Eurozone.

While the UK media has been obsessing about the Leveson Inquiry the European continent has been denying the two most touted solutions to its economic problems - austerity or, my favoured solution, the break-up of the single currency area. The next few days and weeks might be very crunchy.

Final word to Chris Heaton-Harris MP:

Canada stands up for sensible environmental policies and rejects unilateral economic disarmament

By Matthew Barrett
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Several Anglosphere counties are in the process of implementing climate change policies that mean burdensome green regulations which kill jobs. There's the United States, where jobs and energy will move to China unless a new direction is taken on the environment:

"Foreign markets, led by China, could soon become the most appealing options for American energy companies dealing in coal. Environmental Protection Agency regulations, chief among them an effective ban on new coal-fired power plants, are squeezing the U.S. market and strangling the fuel that powered the Industrial Revolution. “You can see it dwindling away,” said Rep. Shelley Moore Capito, West Virginia Republican and co-chairwoman of the House of Representatives‘ Coal Caucus. “The regulations are made without regard. [Federal officials] don’t even ask what kind of impact they’ll have. The EPA has already put in place … rules and other impossible standards that are causing a giant shift of our natural resources to China.”"

Kevin Andrews MP: Australian Labor is on the ropes

The Hon Kevin Andrews MP is a member of the Australian Parliament and publisher of the Australian Polity. This will be the first of an occasional report he'll be submitting for ConHome readers. Follow Kevin on Twitter.

The Australian Parliament is in recess until the annual Budget session in May. Despite the break from proceedings in Canberra, much has happened on the political landscape in the past few weeks.

First, the Labor Party were thrashed in the Queensland election. In what is essentially a ‘first-past-the-post’ system (optional preferential voting) for a unicameral Parliament, the Liberal National Party, led by the former Lord Mayor of Brisbane, Campbell Newman, scored the biggest landslide in Australia’s political history, winning 77 of the 88 seats, and sweeping Labor from office. Neither the Greens, nor the Australia Party, an agrarian socialist movement led by former National Party minister, Bob Katter, made any significant headway.

The outcome was a result of a number of factors. First, the Queensland voters had been waiting for years to oust Labor from office, but there had not been a credible alternative. The unification of the previously warring Liberal and National Parties was a significant step in creating an alternative. The election of Newman, the popular Lord Mayor of Brisbane as opposition leader, albeit outside the Parliament, competed the process.

Finally, Labor ran a totally negative campaign, focused almost entirely on attacking Newman and his family. When they were forced to concede a few days before the polls that there was no substance to the mudslinging, the voters reacted with anger.

One man confronted a whole hemisphere for Britain and the Falkland Islanders. It wasn't Barack Obama. It was Stephen Harper. Friend of Israel. Low tax conservative. Social conservative. All round good man.

By Tim Montgomerie
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It is one year since Stephen Harper won his first majority as Prime Minister of Canada. Read this piece from John Ibbotson in the Globe and Mail and be grateful for this man:

"At the Summit of the Americas in Cartagena, Colombia, this month, Latin American leaders pushed hard for a resolution supporting Argentina's claim to the Falkland Islands. Stephen Harper pushed back.

In a private session with leaders, according to people who know, the Prime Minister fiercely supported the right of the islanders to determine their fate, and they had chosen to remain British. For Canada, this was a matter of deep principle, Mr. Harper insisted.

The United States has always been neutral on the Falklands, but when Canada took the lead, President Barack Obama made it clear he backed Mr. Harper. The resolution failed.

Cristina Fernandez de Kirchner was furious. “This is pointless. Why did I even come here?” the Argentinean president was overheard saying as she stormed out of the conference."

Prospect of President Hollande and collapse of Dutch government raise new questions about €urozone's future

By Tim Montgomerie
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Le Pen won 20% of the vote, the left-wing firebrand Melenchon won 11.7% and centrist Bayrou 8.5%.

It's not looking good for Sarkozy. The momentum that he appeared to be enjoying until a fortnight ago hasn't continued and exit polls (which, in France, are usually very accurate) put him 1.7% behind Hollande in round one of the presidential elections. Mr Hollande is hot favourite to win the second round (no opinion poll has suggested Sarkozy can win in a fortnight's time) and end the recent sweep of right-wing parties' victories in the EU's big states.

Denis MacShane MP sees a victory for Hollande as the beginning of the end for what he called a thirty year-old neo-liberal consensus: "If Hollande wins, the victory will be specific to France. But the implications for European politics and for the future of the democratic left are huge. The 30-year neoliberal consensus should have ended with the crash of 2008. Hollande is prepared to challenge today’s orthodoxy. Can Labour do the same in Britain?"

In this morning's Scotland on Sunday Bill Jamieson noted the left-wing nature of Hollande's platform: "A victory for the Left, on a programme of nationalisation, the creation of 60,000 teaching posts, the introduction of a 75 per cent tax rate and substantial increases in public spending, could trigger a serious exodus out of French government bonds, prompting questions as to how France’s debts and deficits are to be funded."

But do British Conservatives really want Sarko to win? David Cameron had endorsed the French leader and declined to meet Hollande. Dan Hannan, however, doesn't see France's current president as much of an ally: "The truth is that France faces a choice between two socialists. Both favour a command economy, a measure of protectionism, entrenched entitlements ('les acquis sociaux'), deeper European integration, and a dirigiste state. No wonder they argue so fiercely about immigration: that's virtually the only area where they disagree. Bonnet blanc et blanc bonnet, as they say in France. Tweedle-Dum and Tweedle-Dumber."

What does the election mean for the €uro? Nobody knows but if Hollande starts to resist austerity the single currency area could enter a new period of grave uncertainty. David Cottle at the Wall Street Journal thinks the "€uro could struggle whoever wins". Matthew Partridge at MoneyWeek adds: "A Hollande victory will leave Germany as the only major supporter of austerity. While this may be good for growth, bond markets will hate it, which will speed up the euro’s demise."

The mood does seem to be shifting in the €urozone. Netherland's rag-tag coalition government has just failed to endorse an austerity budget and fresh elections seem likely. Geert Wilders quit the Dutch coalition after blaming the EU for belt-tightening measures. Reuters reports significant opposition amongst the population to deficit reduction measures that would cut the Dutch deficit from 4.6% of GDP to within the €urozone's required limit of 3%. The Wall Street Journal isn't optimistic that Holland will elect a fiscally conservative coalition in fresh elections.

There could be real trouble ahead for Europe with Merkollande likely to be a very different beast from Merkozy.

Hardline on terror and promise to balance budget are big themes of soaring Sarkozy

A Channel 4 report:

The latest opinion polls suggest Sarkozy's 10% deficit in the first round of voting has been eliminated and he's now either neck-and-neck at 30% with the Socialist candidate or even marginally in front. The Socialist François Hollande has a 6% lead in the second round, however.

The election is a vital one for the European Left. They are out of power in every major EU state and France represents their best hope for a comeback. GMB union official Ben Fox at the New Statesman examines the importance of toppling Sarkozy for him and his comrades:

"From the high point in the late 90s when Blair, Schroeder, Prodi and Jospin set the terms of debate in European politics, the centre-left has now been reduced to impotence in opposition, in power in a mere handful of countries....

Although social democrats in Denmark and Slovakia have taken power in the past few months, the defeat of the Zapatero government in Spain meant that the Prime Ministers of the five biggest EU countries – Germany, France, UK, Italy and Spain – are all conservative....

The fight-back needs to start and the French elections will offer a clear indication of whether the European left is bouncing back or in possibly terminal decline. The stakes are high. If Hollande and the Parti Socialiste cannot win when the political odds are stacked in their favour, then the prospects for their sister-parties here and elsewhere will look increasingly bleak."

At massive re-election rally Sarkozy stresses paying off France's debts and burqa ban

David Skelton: Mitt Romney's inability to attract blue-collar voters mirrors David Cameron's problems in 2010

David Skelton is Deputy Director of Policy Exchange. You can follow him on Twitter @djskelton.

Newt Gingrich’s annihilation of Mitt Romney in the South Carolina primary served to highlight the Republican front runner’s biggest weakness – he finds it difficult to empathise with blue collar voters. His campaign was found out in a state where unemployment is a major issue and where the blue collar vote is crucial.

Mitt Romney’s problem isn’t dissimilar to the bind faced by Conservatives in the UK. Despite having almost perfect electoral conditions at the last election, the Tories remained handicapped by their “party of the rich” label and failed to make a sufficient breakthrough amongst the skilled working class, who hold the key to British elections.

In an electoral environment dominated by job insecurity and a rising cost of living, politicians such as Romney and Cameron have to be able to empathise with blue collar voters if they’re to achieve electoral success.