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Sarkozy-Hollande Duel Shapes Up in French Election Fight

April 20 (Bloomberg) -- French President Nicolas Sarkozy and his Socialist challenger Francois Hollande have entered the last day of campaigning before the presidential election. Both are courting the supporters of other candidates such as the anti-immigrant National Front's Marine Le Pen and anti-capitalist Jean-Luc Melenchon. (Source: Bloomberg)

French voter turnout held near a 33-year high in the first round of the presidential election that is almost certain to turn into a battle between President Nicolas Sarkozy and Socialist challenger Francois Hollande.

About 70.6 percent of the voters had cast their ballots by 5:00 p.m. Paris time, the Interior Ministry said, close to the 73.9 percent at the same time in the last election. The 84 percent participation in 2007 was the highest since 1974. About 45 million voters, more than 68 percent of the population, are likely to cast their ballots among 10 candidates, the top two of whom will head to the decisive second round on May 6.

“It’s a foregone conclusion who will be in the second round,” said William Keylor, a professor of modern French history at Boston University, said in a telephone interview. “Now begins the not-always easy task of maintaining the base and appealing to the center.”

With the highest joblessness in 12 years and an economy barely growing, Sarkozy, France’s most unpopular post-World War II president, has trailed Hollande in every poll in a head-to- head match in the past 11 months. Hollande promises more spending and higher taxes, saying Sarkozy’s tax cuts worsened French finances and failed to create jobs. Sarkozy claims credit for spending cuts and a retirement-age increase that he says warded off the worst of the euro debt crisis turmoil.

“Where would France be if we hadn’t done the pension reform?” Sarkozy said at his final campaign rally on April 20. “We’d be in the same situation as Spain.”

Debt, Deficit

A CSA survey completed on April 20 showed Hollande will win 28 percent in the first round and Sarkozy 25 percent. That puts Sarkozy, 57, at risk of becoming the first incumbent not to win the first round. Ifop-Fiducial’s last tracking poll had Sarkozy leading 28 to 26. Neither published a margin of error.

The final polls before the vote showed Hollande, 57, with a lead in a head-to-head match of between seven and 14 points over the incumbent, who is finishing his first five-year term.

All ten candidates had voted by midday, with Hollande casting his ballot in Tulle and Sarkozy giving his in Paris’s 16th arrondissement.

The winner faces commitments to the European Union to reduce debt and deficits. Government debt will exceed 90 percent of gross domestic product next year, the International Monetary Fund estimates.

The IMF sees a deficit of 3.9 percent of GDP next year -- while Sarkozy has promised to reach the EU limit of 3 percent -- and growth of 1 percent.

Second-Round Reserves

“Post the election, Hollande probably moves toward the center,” Stephane Deo, the chief European economist for UBS Securities in London, said in a note to investors April 17. “Whoever wins is going to have to start talking honestly about how to tackle the deficits and debt levels.”

The two winners of the first round will also need to court supporters of other candidates in the race. CSA had the anti- immigration, anti-euro National Front’s Marine Le Pen at 16 percent, Communist Party-backed Jean-Luc Melenchon at 14.5 percent, and self-styled centrist Francois Bayrou at 10.5 percent. Five others would split the rest.

Pollsters were barred from publishing surveys between midnight on April 20 and until polls close at 8 pm today.

“The real key of the first round is not who crosses the finish line first but the overall balance between votes for the right and the left,” Gael Sliman, director of BVA, said in e- mailed comments last week. “From this point of view, the Socialist candidate should have important reserves for the second round.”

Debt Rating

The first-round leader has won five of France’s eight direct presidential elections, dating back to 1965. Hollande leads Sarkozy in what the French call “reserves,” or likely support from among the also-rans.

While 85 percent of Melenchon voters will vote for Hollande in the second round, only 54 percent of Le Pen’s supporters are sure to go for Sarkozy, according to a BVA poll April 17. Bayrou’s support splits 39 percent for Hollande and 25 percent for Sarkozy. The rest were undecided.

Hollande, who was party leader from 1997 to 2008 and represents a rural district in the parliament, would be the first Socialist president since Francois Mitterrand in 1995. He has never held a minister’s post.

He has proposed a 75 percent tax on the wealthiest, an increase in the minimum wage, renegotiating European treaties on deficit limits to promote growth, and banning leveraged buyouts.

Sarkozy has stressed personal responsibility, security, and national identity to chip away at support for the National Front. He has sought centrists by saying speculators will attack French bonds should Hollande be elected.

ECB Role

While Standard & Poor’s cut France from AAA this year, the country’s debt has kept the top grade from other credit-rating firms.

“It is particularly difficult to know from either Hollande or Sarkozy what are political rhetoric and electioneering and what are true commitments,” said Marc Chandler, chief currency strategist at Brown Brothers Harriman & Co. in New York.

A Sarkozy ouster would follow those by leaders in Ireland, Portugal, Greece, Italy, Spain, Slovenia and Slovakia since the debt crisis began, and make him the second French president after Valery Giscard D’Estaing in 1981 to lose a re-election bid. Sarkozy’s 36 percent approval rating in an April 15 Ifop poll is the lowest for any post-World War II French president.

‘Lesser Evil’

In the final days of campaigning, both Hollande and Sarkozy have backed a more activist European Central Bank. That risks tensions with German Chancellor Angela Merkel. The comments by Sarkozy also broke a pledge he made with Merkel last November not to publicly comment about the ECB.

“The candidates’ views on European matters have converged over the past few weeks,” Thomas Costerg, an economist at Standard Chartered Bank in London, wrote in an e-mailed comment. “We think fears of a Franco-German rift are overdone. The solid Franco-German relationship goes beyond party politics.”

While about 70 percent of voters have told pollsters they are sure of their choice, that doesn’t mean the campaign has thrilled them. As many as a quarter of registered voters may not vote, said a BVA poll April 6, which would be the second-highest abstention rate in a French presidential election.

“With high unemployment and France’s loss of its triple-A rating, Sarkozy doesn’t have much of a record to run on,” Boston’s Keylor said. “But Hollande has never even held a ministerial position. He doesn’t have much charisma. For many voters, it’s a question of the lesser of two evils.”

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net Mark Deen in Paris at markdeen@bloomberg.net Helene Fouquet in Paris at hfouquet1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net Vidya Root in Paris at vroot@bloomberg.net

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Photographer: Patrick Kovarik/AFP/Getty Images

Francois Hollande, France's opposition Socialist Party candidate for the 2012 French presidential election, comes out of the polling booth to cast his ballot during the first round of the election in Tulle, central France.

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Photographer: Patrick Kovarik/AFP/Getty Images

Francois Hollande, France's opposition Socialist Party candidate for the 2012 French presidential election, comes out of the polling booth to cast his ballot during the first round of the election in Tulle, central France. Close

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Nicolas Sarkozy, France's incumbent President and right-wing ruling party Union for a Popular Movement candidate for the French 2012 presidential election, leaves after casting his vote in Paris for the first-round of the 2012 presidential election. Close

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Nicolas Sarkozy, French President and 'Union pour un Mouvement Populaire' (UMP) party candidate for the 2012 French presidential elections, during a campaign rally in Paris on April 15, 2012. Close

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Socialist Party candidate for the 2012 French presidential election, Francois Hollande, delivers a speech in Bordeaux, France, on April 19, 2012. Close

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