Francois Hollande's victory in France has sent tremors across Europe. He has challenged the German script for managing the crisis.

Voters have changed all calculations. The people have spoken and in increasing numbers are expressing impatience with austerity. Francois Hollande's victory in France has sent tremors across Europe. He has challenged the German script for managing the crisis. Austerity first, in his view, is failing. It is likely that his campaign message contributed to the success of anti-austerity parties in Greece. If voters in France were resisting further spending cuts why should voters in Greece not do the same? Chancellor Angela Merkel looks increasingly isolated. Even voters in North-Rhine Westphalia, the most heavily-populated German state, rejected her party in favour of the Social Democrats (SPD), who promised to go easy on cutting debt. Here's the bind: Europe chose to tackle its debt crisis not just by cutting deficits but by adopting a pact that limits spending in the future. The Germans see it as essential discipline for the survival of the single currency; others see it as a dangerous straitjacket. What had not been envisaged was how swiftly economies would decline. By the end of 2012 the Greek economy will have shrunk by 20% in five years. Italy is mired in recession. Spain will see its economy decline by 1.8% this year and could well remain in recession next year. Almost certainly it won't reach its target for cutting its deficit. France will struggle too. The renowned economist Joseph Stiglitz called Europe's debt strategy "suicidal". If austerity is leading Europe into deep recession - some are saying it is reminiscent of the 1930s - then what is to be done? For borrowing more to stimulate the economies would only deepen the debt crisis. Hence the search for a growth strategy - but structural reforms take time to deliver and Europe does not have time. Which brings us back to Greece. Anti-austerity parties believe that Greece is slowly being strangled economically. They want the terms of their bailout deal renegotiated. They also do not believe that the EU or Germany will allow them to exit the euro, with all its "incalculable consequences". Crunch point The official line in Brussels and Berlin is that there will be no renegotiation. But there are different messages out there. Some are saying that a Greek exit can be "managed" and that the risk of contagion has been reduced. The game of bluff, however, is drawing to a close. The "show me" moment approaches. Will the EU - under pressure from voters - bend and offer the Greeks an easier deal? Or will Germany insist that promises made by governments must be kept? Will Europe change course and accept that it is cutting spending too quickly and embark on a massive infrastructure-building programme? For the truth is that Europe no longer has a convincing policy. Its current strategy is being openly challenged. The continent is drifting dangerously whilst there are daily protests. There can rarely have been a more important meeting than that between the newly elected French President, Francois Hollande, and the German Chancellor tomorrow. Can they compromise or, at this critical juncture, will they form up on different sides?