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Hollande goes to Downing Street

Hollande goes to Downing Street
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New Socialist French President François Hollande has been visiting traditionally eurosceptic London, on his first official trip to Britain.

Current policy tensions across the European Union, over sovereign debt, recession and austerity, make for a tricky diplomatic exercise for both him and British conservative Prime Minister David Cameron.

They met at the G8 summit in May, in an informal setting but in the context of the eurozone crisis. Cameron had been among the first to congratulate Hollande on his May 6th electoral victory. But the British leader has made clear he does not welcome French proposals on a financial transaction tax.

Prickly cross-Channel relations are nothing new of course.

As recently as last autumn, diverging views sparked a heated exchange between Cameron and Hollande’s predecessor Nicolas Sarkozy. They patched it up fairly swiftly. Cameron argued that the eurozone crisis made greater fiscal and economic integration inevitable, saying this must not be at the expense of Britain’s national interest. Cameron openly backed Sarkozy for re-election this spring, breaking with protocol.

Hollande met Labour leader Ed Milliband in London while campaigning for office, but Cameron was not available. Downing Street is now keen to get along with Hollande the winner.

The French president’s plan for higher tax on big incomes brought a remark from Cameron that Paris said was not funny.

Cameron said: “If the French go ahead with 75 percent top rates of taxes we would roll out the red carpet and welcome more French businesses to Britain and they can pay taxes in Britain and that can pay for our health service and our schools and everything else.”

Cameron has refused to back the European fiscal discipline pact, which he fears may compromise the City of London’s position as Europe’s leading financial centre.

The EU Common Agricultural Policy, which benefits French farmers the most, is another key subject, along with Britain’s annual rebate, all coming up in multi-year budget negotiations.

Then there is Afghanistan. Hollande is planning to pull France’s troops out of the Nato-led mission by the end of 2013; the Nato timeframe is 2014. This might prove awkward, and Franco-British defence ties need attention too.

But it is the economic sphere that remains the greatest stumbling block, underlining the ideological differences between Cameron’s focus on austerity and Hollande’s commitment to boosting growth through spending.