Socialist François Hollande swept to victory in France's presidential election on Sunday (6 May) in a swing to the left at the heart of Europe and promised to start a pushback against German-led austerity policies.
Hollande led conservative incumbent Nicolas Sarkozy by 51.3% to 48.7% with 83% of votes counted, the Interior Ministry said, bringing the centre-left back to government in Paris after a decade in opposition.
"Europe is watching us," the president-elect said in a victory speech in his constituency of Tulle in central France.
"I'm sure that in many European countries there is relief and hope at the idea that austerity does not have to be our only fate," Hollande said in remarks apparently aimed at German Chancellor Angela Merkel.
Franco-German relation reshaped
The election comes at a crucial time for the eurozone as France, Europe's No. 2 economy, is a vital partner for Berlin.
Hollande's clear win should give the self-styled "Mr Normal" the momentum to press Merkel to accept a policy shift towards fostering growth in Europe to balance the austerity that has fuelled anger across southern Europe.
Merkel, who had openly favoured fellow conservative Sarkozy, telephoned to congratulate Hollande and invited him to visit Berlin as soon as possible after his inauguration next week.
German Foreign Minister Guido Westerwelle, speaking at French embassy event, said: "We will now work together on a growth pact for Europe, that delivers more growth through more competitiveness."
In his victory speech, Hollande listed "reorienting Europe towards employment and growth" as among his top priorities.
He has made clear he will not to force a ground-up review of the EU's fiscal pact, driven by Merkel and Sarkozy earlier this year, and aides say there will be give and take with Berlin.
Merkel's camp says she is not opposed to his proposal to give the European Investment Bank a more active financing role and making better use of structural funds but she is sceptical on his idea of common EU project bonds to fund infrastructure.
Merkel herself spent an uncomfortable evening as her centre-right Christian Democrats looked likely to lose further local power after a state election in Schleswig-Holstein, continuing a pattern that may erode her chances of a third term next year.
Vote ends 'Merkozy' duo
The vote put an end to the "Merkozy" duo which had led Europe through crisis and ushers in a new, untested partnership.
Voters ousted incumbent President Nicolas Sarkozy for failing to rein in unemployment, becoming the 11th euro zone leader in succession to be swept from power since the currency bloc's debt crisis began in 2009.
The outgoing president conceded defeat within 20 minutes of polls closing, telling supporters he had telephoned Hollande to wish him good luck in such trying times.
"I bear the full responsibility for this defeat," Sarkozy said, indicating he would withdraw from frontline politics.
"My place can no longer be the same. My involvement in the life of my country will be different from now on."
José Manuel Barroso, president of the European Commission, congratulated Hollande for his victory. "The challenges are many, for France as well as for the European Union. I am convinced that together we have the ability to cope," he said, adding that the French election campaign had "demonstrate(d) the vitality of French democracy, and support of a majority of French men and women in the European construction."
"We clearly have a common goal: reviving the European economy to generate sustainable growth, based on a sound foundation that will be a source for new jobs. We must now turn these aspirations into action."
"I listened to his campaign and his ideas. We share the conviction that we must invest in growth and major infrastructure networks, mobilising more strongly the European Investment Bank and the funds available in the EU budget, while maintaining the path of fiscal consolidation and debt reduction."
"I also noted other similarities, particularly in its support for the Commission proposal for a tax on financial transactions and support for Eurobonds for growth."
Conservative British Prime Minister David Cameron, who backed Sarkozy's re-election bid, also called Hollande to congratulate him. "They both look forward to working very closely together in the future and building on the very close relationship that already exists between the UK and France," a British spokeswoman said.
Sergei Stanishev, President of the Party of European Socialists (PES), hailed the election of a socialist to the French Presidency as "a great day, not only for France, but for Europe".
“François’ campaign was one that constantly brought to the fore the importance of a new growth agenda for Europe. I have no doubt that he has the leadership to now begin implementing that agenda and thus to take Europe in a new direction. His election is a victory not just for social democracy in Europe but for justice and solidarity in Europe as a whole”.
Stanishev also rejoiced over the apparent rejection of the austerity consensus in Europe, which he said marked "a profound rejection of the 'Merkozy' madness that has choked European economic growth for the last two years”.
According to the PES leaders, the French Socialists won the election "because they understand the value of an economic stimulus," which Angela Merkel has rejected.
"The platform that was set out before the French people is also the economic platform that the European Union needs. It is based on a fair taxation on financial speculation, it is based on a strong system of European bonds that recognises the economic benefit of pooled resources and it is based on a fair system of personal taxation."
Guy Verhofstadt, President of the Alliance of Liberals and Democrats in the European Parliament (ALDE), welcomed Hollande's election, saying it could bring France "back into a European dynamic" that was hurt during Sarkozy's rule. "With him […] there will be no question of challenging the Schengen Area. And above all, with him, new prospects will open up for the economic governance of the Eurozone".
But Verhofstadt also cautioned Hollande on economic policies, warning that "he mistakenly challenges the budget treaty," saying "nothing will happen without fiscal consolidation."
"However he is right to want this complemented by a growth pact. He also supports the main proposals that I myself have been making for a long time, especially the increased use of EIB funds to issue project bonds to invest in major infrastructure projects that will boost growth and employment in Europe ".
Verhofstadt also said he regretted that Hollande had not clearly taken a position on another key measure to solve the depth of the sovereign debt crisis - the partial pooling of debts with the creation of eurobonds. Various options are on the table and are currently being debated in Parliament and Council. I expect a French impetus in the European Council on this critical issue."
The election of a socialist in the eurozone's second largest economy is seen by many as a potential game-changer for the European Union.
With François Hollande, France is expected to push harder for growth-enhancing measures alongside fiscal discipline as a way to tackle the eurozone's ongoing debt crisis.
For Germany, which has been the main driver behind the austerity consensus in Europe, Hollande will certainly prove a more difficult partner than his predecessor Nicolas Sarkozy.