Europe’s Super Sunday promises an exciting, uncertain future

Voters rejected austerity and they rejected the political establishment.

After a breathless day of elections from the north to the south of Europe, the result is clear. Voters across Europe have decisively broken the austerity consensus that has dominated for the last two years. But while François Hollande’s victory will delight left-wingers across the continent, the people of Europe woke up this morning to a very uncertain future. Unsurprisingly, the financial markets have reacted nervously with share prices tumbling and, in the case of Greece, by 8 per cent already.

There is a danger in hoping for too much from Hollande – he is unlikely to single-handedly turn the tide against the austerity consensus - but his victory signifies a seismic shift in Europe’s politics. With Sarkozy ousted, Angela Merkel has lost her main ally in leading the EU’s response to the debt crisis. Hollande has promised to re-negotiate the fiscal compact treaty and she will almost certainly have to offer concessions to prevent the Merkozy inspired creation from being kicked into touch. Meanwhile, EU officials have spent the last couple of months preparing for a Hollande presidency and will try to buy him off with a growth and jobs pact in exchange for keeping the treaty intact.

Merkel has also taken pre-emptive action to shore up her position by paving the way for her Finance Minister, Wolfgang Schauble, to take over from Luxembourg’s Jean Claude-Juncker as chair of the eurogroup – the eurozone’s 17 finance ministers. Schauble, like his boss, is an austerity-hawk.

Moreover, Hollande’s room for manoeuvre is not that great. While the French economy is not in crisis like the rest of Club Med, with unemployment nudging 10 per cent

and debt repayments amounting to more than the education spending after the country lost its AAA credit rating, it is hardly in rude health. His ability to bargain at EU level is also hampered by the economic governance package forced through by the conservative/liberal majorities in the European Council and the European Parliament. This forms the centre-piece to the EU’s austerity drive, locking EU countries into strict rules on overall budget deficit and debt levels, with fines for non-compliance.

However, the mood of the public and politicians has moved decisively. Hollande has promised to offer an alternative to a diet of cuts and to re-balance tax system, and he will need to sketch out a coherent economic programme in the first few months of his presidency. He should also try to make allies of Italian Prime Minister Mario Monti and the President of the European Central Bank, Mario Draghi, who have also made recent demands for economic growth and job creation to be prioritised over spending cuts.

But while the future for France is exciting, the future for Greece now looks even more uncertain. A country brought to its knees by bankruptcy and austerity now has a full-blown political crisis to cope with following a complete fragmentation of the party system.

The complete destruction of the two dominant parties is quite staggering. For the centre-right New Democracy party, which topped the poll despite winning less than 20 per cent of the vote the result is merely dismal. Their long-time rivals, the socialist Pasok party, which won the last election in 2009 with 43 per cent, fared even worse - annihilated with just 13 per cent. The two parties which have dominated Greek politics since the end of military rule in the 1970s, and which secured nearly 80 per cent of the vote in 2009, took just 32 per cent between them. By any yardstick the Greek electorate has given its political class a good kicking and the old status-quo will not be the same again.

If it was hard to see how Greece was going to cope with the terms of the second €140bn bail-out package with a relatively stable coalition, it now appears almost inconceivable that the deal will survive as it stands. All parties bar Pasok supported either re-negotiation of the terms or rejection even though moves to re-negotiate would be met with hostility by most EU countries.  If New Democracy’s leader Antonis Samaras, as expected, becomes Prime Minister, there are no obvious ways for him to cobble together a majority without accommodating parties on the far-left and right which want to tear up the bail-out agreement. New elections in a few months cannot be ruled out, although this is unlikely to make much difference. It is hard to see what possessed New Democracy and Pasok to agree to early elections. 

In the meantime, we can expect calls for the out-going technocratic Prime Minister, Lucas Papademos, to remain in government. Untainted by the debt crisis, Papademos enjoyed high personal ratings throughout his six months in charge and, if he can be persuaded to put his wish to return to teaching in the US on the back-burner, he would make a popular Finance Minister.

There was, however, one country where voters did not reject a governing party promising fiscal austerity – Germany. Angela Merkel’s CDU still topped yesterday’s poll in the German Lander elections in Schleswig-Holstein. Even though the CDU vote fell to 31 per cent, their lowest score in 60 years, they still narrowly beat the SPD. The real losers were Merkel’s coalition partners, the free-market Free Democrats, who collapsed to just 6 per cent, well beaten by the Greens and the Pirate party. Nonetheless, it is clear that Merkel still commands support and respect in Germany and, as an experienced leader of Europe’s strongest country, she is still the strongest force in EU politics.

For all that, however, there are two big messages that voters across Europe sent to their politicians on Super Sunday – they rejected austerity and they rejected the political establishment. Mainstream parties of the left and, particularly, the right should watch, listen and learn from these results. But those who have despaired at the right's obsession with self-defeating spending cuts have a reason to be optimistic again. Now it's up to you Francois.

Ben Fox is chairman of GMB Brussels and political adviser to the Socialist vice-president of economic and monetary affairs.

Financial markets in Greece have tumbled by eight per cent. Photograph: Getty Images.
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Chuka Umunna calls for "solidarity" among Labour MPs, whoever is voted leader

The full text of shadow business secretary Chuka Umunna's speech to Policy Network on election-winning ideas for Labour's future, and the weaknesses of the New Labour project.

There has never been an easy time to be a social democrat (or “democratic socialist” as we sometimes call ourselves in Britain). Whereas the right can demonise the poor and extol the virtues of the market, and the hard left can demonise the market and extol the role of the state, our position of constraining the domination of markets and reforming the state is, by definition, more complex.

It is nonetheless the case that social democracy has a historic responsibility, in every generation, to renew democracy and preserve a civic culture. This is achieved not through soundbites and slogans, but through the hard-headed development of a progressive politics that reconciles liberty and democracy, new comers and locals to our communities, business and workers, in a common life that preserves security, prosperity and peace.  This historic mission is all the more urgent now and my determination that we succeed has grown not weakened since our election defeat last May.

But, in order to be heard, it is necessary to make balanced and reasonable argument that both animates and inspires our movement, and which is popular and plausible with the people.  The first is pre-requisite to the second; and there is no choice to be made between your party’s fundamental principles and electability. They are mutually dependent - you cannot do one without the other.

We are in the midst of choosing a new leader and it is clear to anyone who has watched the UK Labour Party leadership election this summer that amongst a significant number there is a profound rage against Third Way politics – as pursued by the likes of Bill Clinton, Tony Blair, Gerhard Schröder and others - as a rejection of our fundamental values.

In the UK there is a view that New Labour accepted an uncritical accommodation with global capital that widened inequality, weakened organised labour and we were too close to the US Republicans and too far from the European left.

I do not believe this is fair, not least because we rescued many of our public services from the scrap heap when we came to office in 1997 and there were very significant achievements  we should celebrate.  New Labour renewed our National Health Service in a fundamental way; we built new schools and improved existing ones; we set up new children’s centres all over the country; we brought in a National Minimum Wage; we worked with others to bring peace to Northern Ireland; we introduced civil partnerships.  Just some of our achievements.

However, though we may take issue with the critique, I do not think we can simply dismiss out of hand those who hold critical views of New Labour. Like any government, the New Labour administration made mistakes - it could and should have achieved more, and done more to challenge the Right’s assumptions about the world. In the end, it is not unreasonable to be ambitious for what your party in government can achieve in building greater equality, liberty, democracy and sustainability. It is far better we acknowledge, not reject, this ambition for a better world, as we seek to forge a new politics of the common good fit for the future.

Realising our values in office has been disrupted by globalisation and the surge of technological forces that are displacing and reshaping industry after industry.

Some argue that globalisation as an ideological construct of the right. But we must recognise that we live in an increasingly integrated world in which markets have led to an unprecedented participation of excluded people in prosperity, a rise in living standards for hundreds of millions  of people and a literacy unprecedented in human history – this is particularly so in emerging economies like my father’s native Nigeria. And the internet has led to a level of accountability that has disturbed elites.

Yet, this has been combined with a concentration of ownership that needs to be challenged, of a subordination of politics that requires creative rather than reactive thinking, and these global forces have exacerbated inequalities as well as helped reduce poverty.

So it is important that we understand the sheer scale and impact of new technologies. At the moment we are engaged in a debate about Uber and its threat to one of the last vestiges of vocational labour markets left in London, those of the black taxi cabs and their attainment of 'The Knowledge'. But the reality is that within the next decade there will be the emergence of driverless cars so we have to intensify our exploration of how to support people in a knowledge economy and the realities of lifelong learning, as well as lifelong teaching. As people live longer we will have to think about how to engage them constructively in work and teaching in new ways.

Once again, I'm addressing all of this, Social Democracy requires a balanced view that domesticates the destructive energy of capital while recognising its creative energy, that recognises the need for new skills rather than simply the protection of old ones. A Social Democracy that recognises that internationalism requires co-operation between states and not a zero sum game that protectionism would encourage.

Above all, Social Democratic politics must recognise the importance of place, of the resources to be found in the local through which the pressures of globalisation can be mediated and shaped. Our job is to shape the future and neither to accept it as a passive fate nor to indulge the fantasy that we can dominate it but to work with the grain of change in order to renew our tradition, recognising the creativity of the workforce, the benefits of democracy and the importance of building a common life.  Sources of value are to be found in local traditions and institutions.

This also requires a recognition that though demonstration and protest are important,; but relationships and conversations are a far more effective way of building a movement for political change.

One of the huge weaknesses of New Labour was in its reliance on mobilisation from the centre rather than organising. It therefore allowed itself to be characterised as an elite project with wide popular support but it did not build a base for its support within the party across the country, and it did not develop leaders from the communities it represented. It was strong on policy but weak on strengthening democratic politics, particularly Labour politics.

Over half a million people are now members, supporters or affiliated supporters of our party, with hundreds of thousands joining in the last few weeks. Some have joined in order to thwart the pursuit of Labour values but many more have joined to further the pursuit of those values, including lots of young people. At a time when so many are walking away from centre left parties across the Western world and many young people do not vote let alone join a party, this is surely something to celebrate.

So it is vital that we now embrace our new joiners and harness the energy they can bring to renewing Labour’s connection with the people. First, we must help as many them as possible to become doorstep activists for our politics. Second, I have long argued UK Labour should campaign and organise not only to win elections but to affect tangible change through local community campaigns. We brought Arnie Graf, the Chicago community organiser who mentored President Obama in his early years, over from the U.S. to help teach us how to community organise more effectively. We should bring Arnie back over to finish the job and help empower our new joiners to be the change they want to see in every community – we need to build on the links they have with local groups and organisations.

I mentioned at the beginning that in every generation Social Democracy is besieged from left and right but the achievements of each generation are defined by the strength of a complex political tradition that strengthens solidarity through protecting democracy and liberty, a role for the state and the market and seeks to shape the future through an inclusive politics. Solidarity is key which is why we must accept the result of our contest when it comes and support our new leader in developing an agenda that can return Labour to office.

Yes, these are troubled times for social democrats. All over Europe there is a sense among our traditional voters that we are remote and do not share their concerns or represent their interests or values.  There is surge of support for populist right wing parties from Denmark to France, of more left wing parties in Greece and Spain and in Britain too. There is renewal of imperial politics in Russia, the murderous and abhorrent regime of ISIL in the Middle East, volatility in the Chinese economy and in Europe a flow of immigration that causes fear and anxiety.

But, the task of Social Democracy in our time is to fashion a politics of hope that can bring together divided populations around justice, peace and prosperity so that we can govern ourselves democratically. We have seen worse than this and weathered the storm. I am looking forward, with great optimism to be being part of a generation that renews our relevance and popularity in the years to come.

Chuka Umunna is the shadow business secretary and the Labour MP for Streatham.