Letter from... Brussels

Jeremy Woolfe on the business implications of Nicolas Sarkozy as newly elected French President

It will take some time for detailed implications of the election of Nicolas Sarkozy as President of one of the European Union's principal founding fathers to be properly absorbed in the minds of the politicians, bureaucrats, lobbyists, legal experts and a myriad of others wedded to the Brussels institutional family.

Obviously the general reaction of organisations such as BusinessEurope, for the employers, must be of great satisfaction. Now the lobby can breathe again, content in the knowledge that Europe's centre-rightists are consolidating. There will definitely be an easier atmosphere in this corner of Brussels as France is set to drop anti-business positions. In fact officials at the confederation, which represents 16 million companies across Europe, were almost lost for words when asked for an official reaction to the election result.

Clearly, they had other things on their minds. Their website reveals details of talks between the President, the Frenchman Ernest-Antoine Seilliere, and his fellow countryman, Jean-Claude Trichet, head of the European Central Bank, located at Frankfurt. The screen shows that bank interest rates in the eurozone must be high on the agenda.

And this brings us straight back to Sarkozy and Segolene Royal. Both have opposed the independence of the bank. Jobs must come first has been their joint cry. However, Brussels would worry if it thought that Sarkozy could not wriggle out of his former position as he takes up the reigns of office.

Parallel verdicts on how the French election results will affect things in the capital of Europe come from the accountants. Try asking the European Federation of Accountants (FEE), in its prestigious offices near Rond-point Schuman (the EU's Piccadilly Circus), what effect the election result is going to have on Europe's Financial Service Action Plan (FSAP)?

On this specific the tongues wag because the FSAP is important to Europe's financial policy upgrade. The plan's aim is to get interest rates down for European companies, so that they can acquire capital, and thereby provide jobs. Having first seen light at the start of the century, it is now about halfway to completion and moving with vigour.

Was FEE ever afraid that a victory by Royal would have wrecked all this? Would she have tried to derail the already difficult birth of its MiFID component, for instance? This is the thunderbolt legislation, the Markets in Financial Instruments Directive, due to come into effect on 1 November. 'Don't quote me,' one person at FEE exclaimed, 'but the lady's policies are so wishy-washy that we don't even know what they were on anything, let alone on financials.'

Chat in the Brussels bar rooms (or rather, as this is Brussels, in one elegant salon or another) notes that Royal had called for a referendum in France on the constitution. However, the referendum would have also mixed in a vote on a social chapter. In practice, this would have fatally choked the referendum. EU intelligentsia would abhor such a prospect.

So what comes up trumps in the salons, among the tasty canapes and genteel wine, is Sarkozy's support for the mini-treaty, to replace the dead-duck European constitution. Now senior officials look forward with relief to the likelihood of reform. First of the treaty's delights will be an increase in majority voting decisions from EU member governments. Yes, special interest groupings will suffer. European citizens will gain.

Then there is the Commission (division) that deals with employment, in name at any rate. Its Commissioner, Vladimir Spidla, may have been slow to catch up with the election news, having just spent time at the Eurovision Song Contest. The Czech was there to promote 'the European year of equal opportunity', at what the Commission describes as a 'vibrant European-wide entertainment event'.

However, for those who seek, reality can be found in Brussels. Commissioner Joaquin Almunia, from Spain, who deals with boring old economic and monetary affairs, now forecasts EU growth by 2.9% this year, up from 2.7% predicted earlier. Unemployment should drop to 6.7% by next year. Naturally, Brussels feels that the Sarkozy victory will reduce the risk of reversals.

Finally, there is the thorny matter of the European Parliament's monthly travelling circus from Brussels to Strasbourg. The moves between two buildings are hugely inconvenient. And, apart from feeding euro-scepticism, the annual bill to the taxpayer totals a shocking £135m. What is more, it generates a deplorable 20,000-30,000 tons of CO2 greenhouse gas per year.

What might Sarkozy's spirit of tough pragmatism give as a solution? Support France at all cost? Or strike a bargain to shut down the Strasbourg white elephant? Would compromise lose him clout with the Gallic voters? Would it give the Frenchman a halo in Europe? And, if so, could he benefit? Ever since Jacques Delors left Brussels, most agree that he left behind a leadership vacuum. Could Sarkozy ever fill that role?

Jeremy Woolfe is a freelance financial journalist based in Brussels.