Elections threaten Sarkozy’s deal

THE French presidential elections have cast a shadow over attempts by the heads of eurozone governments to save the besieged currency after one of the leading contenders said he would renegotiate any deal.

President Nicolas Sarkozy is facing pressure at home after socialist candidate Francois Hollande condemned the deal he struck with German chancellor Angela Merkel, arguing it was not right for France.

He said that what was needed was for the European Central Bank to be given the powers to print money and issue joint eurobonds, something the Germans fiercely oppose.

He said: “This accord is not the right answer, nor does it have the urgency. If I am elected president, I will negotiate, renegotiate this deal to include what is missing today.”

Mr Hollande’s chances of victory have been given the boost by the entry of an independent candidate, former French Prime Minister Dominique de Villepin, who gained international renown as France’s spokesman against the war in Iraq and was a member of Mr Sarkozy’s party.

And to make matters worse for the French president, France’s credit rating looked set to be downgraded from triple A status.

Mr Sarkozy told Le Monde newspaper that the ratings agencies had identified French banks as a risk to France’s rating, but the European Banking Authority had deemed them to need less capital than their German counterparts.

The French president also warned that the Europe Union is set to become a two-tier institution after Prime Minister David Cameron’s move last Friday.

But he insisted he wants the UK to stay in the single market.