Europe's battle of ideas on solving the economic crisis

A duel of ideas on solving Europe's economic crisis beckons if Hollande wins in France. Photo: REUTERS/Stephane Mahe

A fascinating duel of ideas is unfolding in Europe - which matters to each and every one of us.

At its heart is tension between those who think the crisis was caused by chronic overspending by individuals as well as governments and which can be cured now by tightening purse strings. It's the bitter pill of austerity.

And in the other corner are those who accept the root cause but think it madness to reign in government spending when companies are starved of credit, when individuals are losing their jobs and confidence has evaporated.

Where is the growth to come from unless governments inject cash through benefits, subsidies or infrastructure, they ask.

Until now the battle of ideas has been won by the austerity camp, but change is in the air and it may be coming from France.

On Sunday, Francois Hollande looks likely to be elected French president on a manifesto which promises growth. He has rattled many (and enthused others) with policies that will raise taxes, increase government spending and protect workers. The polls suggest the people like his ideas.

At his rally in Toulouse today, Mr Hollande claimed to have received messages of support from Greece, Portugal, Spain and Italy urging him to bring a new approach to the Eurozone crisis. ITV News' Europe Editor James Mates reports:

What's fascinating is that Mr Hollande is already changing the debate across Europe.

I'm writing this in Barcelona where the European Central Bank has been meeting (one of the twice-annual ventures from its base in Frankfurt).

I asked the president of the ECB whether the calls for a relaxation of austerity were right. It prompted a startling venture into politics from a man who normally steers clear.

Francois Hollande (left) took part in a televised debate with Nicolas Sarkozy (right) yesterday. Credit: TF1

Mario Draghi, who has been a firm advocate of cutting spending to bring government budgets into line, conceded that growth must be brought back to the centre of the agenda.

Also, speaking in Spain where every other person under 25 is out of work, he acknowledged that there must be reforms to workers' rights, which are too rigid and are one of the main reasons companies are reluctant to take on new staff.

In a park in the centre of town, I spoke to Jordi and Ivan, a couple in their early twenties who are suffering the consequences.

Police were deployed to protests in Barcelona, where the ECB meeting took place. Credit: ITV News
Students gather to demonstrate over austerity measures and low youth unemployment. Credit: ITV News

Both are very pessimistic of their prospects but Jordi explained he hoped Mr Hollande would be elected across the border, helping to change the eurozone mantra of cuts which are blighting his prospects in Spain.

It's not yet clear what Mr Hollande would actually do if in power and his hands are tied by markets which will demand unaffordable rates for the government loans required to fund anything other than a very modest spending spree.

But the prospect of his election is already focusing minds among the eurozone elite.

Don't expect a handbrake turn but I do think we will see a new, more sympathetic rhetoric from politicians in future.