PARIS: Fears of a renewed eurozone crisis and France’s spiralling public debt are overshadowing the presidential race, with the Socialist frontrunner Francois Hollande accusing Nicolas Sarkozy of trying to scare the markets to secure re-election.

With just over a week to go until the first round of voting presidential candidates are at each other’s throats over which of them would drive the country to financial ruin. As markets get jittery over Spain and Italy, economists have warned that France could be the next economic basket case to shake the euro.

The eurozone’s second-largest economy, with generous welfare and high levels of public spending, has been told by its national auditor it risks an unsustainable debt spiral. Unemployment is at a 12-year high of almost 10 per cent, growth is stalling, the triple A credit rating has been downgraded and interest repayments are the second biggest item of state expenditure.

Analysts warn none of the main candidates is going far enough to slash spending. The French social model, with its wide-ranging benefits, remains paramount. There has not been a balanced budget since 1974.

Sarkozy said that if Hollande won the final vote on 6 May it would spark a speculation run by financial markets. “If we start hiring civil servants, if we start spending again, if we throw the pension reform into question, it’s not a risk that interest rates will rise, it’s a certainty,” he said. He has repeatedly warned Hollande would lead France towards the fate of Greece or Spain.

The prime minister, Francois Fillon, said victory for the left would unleash unstoppable speculation against the euro. Hollande shot back that Sarkozy was encouraging market volatility for political ends. “What is in France’s interest is fighting speculation, not encouraging it under the pretext of helping him in the presidential election,” Hollande said on France 2 television. He said he was committed to restarting growth and cutting the deficit.

The Socialists accuse Sarkozy’s right-wing government of plunging the country further into debt over the past five years, failing to solve the euro crisis and losing France its top credit rating.

Both Hollande and Sarkozy, unable to pay pensions or public workers’ salaries without huge borrowing, have vowed to restore public finances and stabilise public spending. Sarkozy wants to bring France’s deficit to zero by 2016, and Hollande by 2017. But there has been little detail over how state spending will be curbed.

Jacques Attali, an economist, warned of the terrible hangover awaiting France after the election, whoever wins. He said when the dire state of finances became clear, a government could find itself making harsh spending cuts or raising taxes, which could see French workers take to the streets in huge strikes.

Latest opinion polls suggest Francois Hollande will win the presidency in the second round of voting on 6 May.

By arrangement with the Guardian