Despite increasing opposition to Germany's austerity policies in Europe, German officials are not planning to change their approach to the debt crisis. Chancellor Angela Merkel dismissed the idea that Europe was on the verge of a major policy shift after recent election results in Greece and France. While many interpreted these results as a move towards more spending-focused policies, Merkel's allies indicated that they expected French President Francois Hollande to make concessions rather than Germany. They believe that Hollande's campaign promises could be risky for the eurozone as a whole. Volker Kauder, parliamentary leader of Merkel's conservatives and a close ally, stated that the German government's stance is clear and they will continue to focus on saving. Following a disappointing state election for her Christian Democrats (CDU), Merkel is aware that in order to secure a third term next year, she must listen to German voters who do not want their money being given to foreigners. Kauder emphasized that Germans should not have to bear the financial burden of a Socialist victory in France through increased guarantees and funds. Germany does not intend to provide financial support for the promises made by the French government during their election campaign. These promises, which include balancing the budget, hiring new teachers, implementing a 75% tax on high incomes, raising the minimum wage, and advocating for joint euro zone bonds and a more active role for the European Central Bank, are seen as costly and go against Germany's beliefs. Andreas Schockenhoff, a prominent CDU lawmaker, predicts that Hollande will soon commit to policies that promote stability. Repeatedly questioned at a press conference about whether the French and Greek votes could impact the policy debate in Europe, Merkel's spokesman Steffen Seibert emphasized that the way forward was growth through structural reform - such as changes to tax and labor rules to enhance trade - rather than stimulus plans funded by debt. Merkel herself stated that, while tactics could be discussed, the overall strategy agreed upon by EU leaders in a compact on fiscal consolidation was non-negotiable. She acknowledged that France, under its new president, would bring its own perspective to the debate, but stressed that both solid finances and growth were essential for progress. Merkel reached out to Hollande, whom she had never met, after his victory and the two had a lengthy conversation with the help of interpreters. Sources informed Reuters that the discussion between Hollande and Merkel was amicable, with Hollande expressing his desire for strong relations. Hollande is scheduled to travel to Berlin, most likely on May 16 after assuming office, for his first official trip. Merkel stated that Hollande would be warmly received. Germany has indicated its willingness to discuss a "growth pact" with the new French president, potentially giving Hollande a win in his efforts for a more equitable response to the crisis. However, it is unlikely that bold new initiatives that could significantly help struggling economies such as Greece and Spain will be implemented. CDU budget expert Norbert Barthle stated that while boosting growth is important, the focus should be on structural reforms. German officials are considering a more flexible use of EU structural funds, increasing the capital of the European Investment Bank (EIB), and allowing the issuance of "project bonds" to finance infrastructure investments. These measures would not require a large amount of new funds from Berlin, making them acceptable. However, Germany is opposed to the idea of implementing new government stimulus programs, extending the deadline for euro members to reduce their deficits, or granting the ECB additional powers to boost growth. A senior German official emphasized that there will be no relaxation of deficit targets, citing Hollande's commitment to work with Germany as evidenced by his focus on deficit reduction in his victory speech. Hollande's economic adviser, Michel Sapin, also stressed that their administration is not planning to simply spend money without accountability. Officials in Berlin and Brussels are taking a firm stance on Greece, stating that there is no room for the country to back out of or modify the terms of its multi-billion euro rescues by the European bloc and the IMF. The recent failure of the traditional Greek political parties to secure a majority, along with a rise in support for extreme parties, has led to concerns about whether Greece will uphold its commitments and speculation about the possibility of it leaving the euro zone. A senior euro zone source emphasized that Greece must adhere to the program to receive financing from member states, or else face default. The consequences of a default are uncertain, but it would likely result in further hardship for Greek citizens. At the heart of the European project, which was established to put an end to a series of wars with France and Germany at its core, Hollande can count on the support of Italy, the euro zone's third largest economy. Despite facing challenges such as a struggling business environment and budget cuts to satisfy cautious creditors, Prime Minister Mario Monti's technocratic government has backed the new French president's pro-growth strategy. Hollande's approach towards Germany, France's crucial partner, will be revealed when he announces his government later this month. Jean-Marc Ayrault, a German-speaking candidate who is familiar with the country and has made conciliatory gestures towards Berlin recently, is a strong contender for the position of prime minister. Opting for Ayrault over Martine Aubry, a more traditional Socialist known for implementing the 35-hour workweek in France, would indicate Hollande's willingness to compromise. Louis Gargour, chief investment officer of hedge fund LNG Capital, expressed his curiosity about whether Hollande will begin his presidency by challenging Merkel. He sees this as a clash between Keynesian economics and a push for growth, versus a prolonged period of austerity that voters are increasingly weary of.