Francois Hollande

Germany's Angela Merkel at Thursday's cabinet meeting, where new budget targets were decided.

After last month’s tension-filled EU summit – an all-night affair to agree the EU’s €960bn seven-year budget – the two-day gathering beginning today is expected to pale by comparison to a considerable degree. “A bit boring is not a bad thing on this occasion,” said one senior diplomat involved in pre-summit negotiations.

Although Hungarian prime minister Victor Orbán is expected to address the international press today following his government’s controversial passage of constitutional amendments which critics claim may violate the rule of law, the only real issue that could potentially generate much heat inside the gathering is the ongoing austerity versus growth debate that has been swirling since last month’s Italian elections.

There has already been some shadow boxing on the issue between France’s François Hollande and Germany’s Angela Merkel ahead of the summit – with Hollande making the case for France to get a one-year pass on its EU deficit targets, while Merkel conspicuously announcing her own intention to get to a balanced budget a year earlier than required. Read more >>

Hollande arrives at the Party of European Socialists gathering ahead of the EU summit.

François Hollande, the French president, has just arrived at the socialist confab at The Square meeting centre in Brussels. Read more >>

In our interview published today with Michel Barnier, the silver-haired Frenchman who oversees the EU’s financial system, he talks in great depth about the future of banking regulation and his relationship with François Hollande.

EU commissioner Michel Barnier

EU commissioner Michel Barnier

For Barnier, the election back home not only brought him a new French president to deal with, but also a mixed legacy for his political home, the centre-right UMP. The party’s standard-bearer Nicolas Sarkozy used the waning days of the campaign to openly court voters who had supported the far-right National Front through anti-EU rhetoric.

In addition to threatening to pull France out of the EU’s passport-free Schengen travel zone, Sarkozy regularly belittled the European Commission and urged “buy French” policies that violated the EU’s common market.

In our hour-long interview, Barnier insisted that such Europe-bashing was only the result of overheated politics ahead of a contentious vote. “I think you have to put to one side the electoral campaign,” he said, citing UMP party luminaries like François Fillon and Alain Juppé who have strong pro-European pedigrees.

Still, Barnier said he intends to actively insert himself in the post-Sarkozy debate about the UMP’s future – though he assiduously declined to say what role him himself might play in that new party. Read more >>

Welcome to our rolling coverage of the reaction to elections in France and Greece on a big day for Europe.

By Tom Burgis, John Aglionby and Esther Bintliff in London with contributions from FT correspondents around the world. All times are London time.

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12.44 Borzou Daragahi, the FT’s north Africa correspondent, reports on the response to the French election results in the Arab world:

Across a region undergoing tumultous change, many greeted the fall of Nicolas Sarkozy with glee, hopeful it would spell the end of French foreign policies considered too Atlantacist, pro-Israel and anti-immigrant.

Though many Libyans hailed Mr Sarkozy for his role in spearheading Nato’s help in toppling Col Muammer Gaddafi, others remember his administration’s cozy ties with deposed Tunisian leader Zein el Abidine ben Ali and Egypt’s former President Hosni Mubarak.

Ties between Tunisia’s new government, dominated by a coalition of Islamists and leftists, and France have grown particularly strained. In an interview with the FT in January, Islamist party leader Rachid Ghannouchi accused France of arrogantly giving Tunisia ‘lessons’ on economic and social policy despite its own problems.

Mustapha Ben Jaafar speaking on April 27, 2012. AFP PHOTO/ FETHI BELAIDFETHI BELAID/AFP/GettyImages 

Mustapha Ben Jaafar on April 27, 2012. AFP PHOTO/ FETHI BELAIDFETHI BELAID/AFP/GettyImages

After Mr Sarkozy’s defeat, Mustapha ben Jaafar, speaker of the Tunisian parliament and leader of the left-leaning Ettakatol party, hailed François Hollande’s arrival as way to update bilateral relations.

“We are hopeful that the arrival of the Socialists will give impetus to the historically strong relationships between our two countries,” he said in a statement. “With France, the new democratic Tunisia wants to build a true partnership that respects the values of freedom and human rights, based on a strategy of co-development and shared prosperity.”

12.22 The election results in Greece testify to widespread dissatisfaction with the country’s mainstream conservative and socialist parties. Voters have punished the political groups they see as jointly responsible for the economic crisis, with once marginal groups rapidly gaining ground.

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