Merkel: Fiscal compact is non-negotiable

Angela Merkel, who had openly favoured Mr Hollande’s conservative rival Nicolas Sarkozy before the election, congratulated Mr Hollande but warned that there could be no reversal of the compact.

The agreement, signed in March by all EU member states except Britain and the Czech Republic, puts strict caps on government spending and borrowing in a bid to head off the sovereign debt crisis in the eurozone.

Before the election, Mr Hollande had promised to rewrite the deal, saying: “The day after the vote, if I receive a mandate, I will address a memorandum to the heads of state on renegotiating the compact.”

Mr Hollande won the presidency with 51.7 per cent of Sunday’s runoff vote and is expected to be sworn in on 15 May.

Mrs Merkel said: “We will work together well and intensively and we will meet very soon after his inauguration.

“And I might add that Francois Hollande will be welcomed with open arms here in Germany by me, and we will have intensive talks because the Franco-German co-operation is essential in Europe.”

We in Germany are of the opinion, and so am I personally , that the fiscal pact is not negotiable. Angela Merkel

But she added: “We in Germany are of the opinion, and so am I personally , that the fiscal pact is not negotiable. It has been negotiated and has been signed by 25 countries.

“I think that the fiscal pact is right. And it is a basic approach in Europe that we don not change everything we have decided upon already after elections – whether in big or small countries. If that was the case then we could not work in Europe.”

Mr Hollande made no immediate comment on the fiscal compact on Monday, but promised to set to work immediately.

He said: “I must prepare myself. I said that I am ready, now I must be so.”

He pointed out that “there is no transfer of presidential authority yet” but pledged that everything will be done “on time”.

There are people who thanks to us have hope and who are watching us and want the end of austerity. Francois Hollande

In his victory speech on Sunday night he told supporters: “There are people who thanks to us have hope and who are watching us and want the end of austerity. That is my message.

“You are much more than a people who want change, you are already a movement that is rising up to carry our values and aspirations across Europe and perhaps even the world.”

Opinion polls on Sunday showed the left strongly placed to win a majority in parliamentary elections next month, especially since the anti-immigration National Front is set to split the right-wing vote and hurt Mr Sarkozy’s UMP party.

If they win that two-round election on June 10 and 17, the Socialists would hold more levers of power than ever before, with the presidency, both houses of parliament, nearly all the regions and two-thirds of French towns in their hands.

That kind of mandate will give Mr Hollande the momentum to press Mrs Merkel for a shift towards fostering growth in Europe to balance the austerity that has fuelled anger across southern Europe.

With anti-austerity parties winning almost half the votes in Greece, the euro tumbled to a three-month low while oil and Asian shares slumped in early trading in Asia as the two elections fuelled fears about a new chapter in Europe’s crisis.