Germany prepares for stoic lone battle for austerity to continue

“Merkel fights on alone” was Monday’s headline in German business newspaper Frankfurter Allgemeine Zeitung, and summed up sentiment in Angela Merkel’s homeland on the day after both French and Greek voters gave a thumbs-down to the kind of European austerity the chancellor backs.

Merkel (pictured) said today any renegotiation of the fiscal pact between the eurozone members, on which central support relies, “simply is not in question. The fiscal pact is agreed and must now be further implemented.”

She said: “Progress is only possible through solid finances plus growth, that has long been the reasoning of the European Commission and European Union.”

Speaking specifically of German-Franco relations, Germany’s chancellor added: “Germans and French working together if essential for Europe. This working together will begin quickly, because we all want success for Europe.”

Merkel was blunt in saying it was also important that Greece’s austerity program be continued “and the path of austerity be adhered to”.

The two major parties in Athens backing austerity have not together won enough votes to govern in coalition, and it was reported the left-wing anti-austerity party Syriza will try to build a coalition of its own.

Equity markets seemed surprisingly unmoved by the installing of Hollande to power in Paris – possibly because the victory was fairly expected since outgoing president Nicolas Sarkozy failed to win an outright majority in the first round of voting.

France’s Cac 40 index of leading shares rose 53.3 points, or 1.7%, ending the day just below the high it reached just minutes before.

Germany’s Dax index, meanwhile, fell sharply on opening, but then rose steadily after the first 15 minutes to close up just 0.1%, or 8 points, also near its high point for the day.

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