Markets to Give France a Grace Period, Analyst Says PARIS - Of all the changes that have hit Europe during its long-running debt and economic crisis, a power shift in France, where François Hollande is preparing to take over as the country's first Socialist president in 17 years, may prove to be one of the most significant. Mr. Hollande ran a campaign that captured the imagination of a public wary of austerity. But investors fret that he will spend more than he should to bolster a flagging economy, rather than move ahead with labor market and business reforms that economists say France sorely needs to lift competitiveness and prevent it from getting caught in the euro's resurgent troubles. At least one ratings agency has stripped France of its sterling triple-A sovereign debt rating because of concern about its finances. Mr. Hollande has vowed to restore social equilibrium in France, in part by pushing back against the austerity championed by Chancellor Angela Merkel of Germany and the European Central Bank president, Mario Draghi. Mr. Hollande's plans include rolling back tax breaks that Mr. Sarkozy gave to the wealthy, and increasing state-sponsored investment, in part by creating tens of thousands of civil sector jobs. His talk has already had the effect of unnerving some investors, who drove France's borrowing costs higher recently on concern he was underestimating how costly some of his spending programs might be. More than 55 percent of France's gross domestic product is made up of public spending, the highest in the euro zone. "That shows that the only way to change things is to reduce public spending, but François Hollande is still willing to increase it to finance his measures and balance the budget through higher taxes," said Evariste Lefeuvre, chief Americas economist in New York for the French bank Natixis. It's something that will frighten markets a bit. Another concern is that Mr. Hollande may not be able to halt an erosion of competitiveness in the corporate sector, which is dominated by many small and midsize businesses that do not export much, and where profitability is generally low. France also faces declining exports and a widening current-account deficit that is one of the euro zone's highest. These troubles have investors fretting that France is drifting from the "core" of strong European economies that include Germany and the Nordic countries. These days, many are starting to lump France with the weak large economies of Spain and Italy, along Europe's troubled southern rim. With a large public deficit and a sharply diminished manufacturing sector that has eroded under globalization, "France can already be considered part of the south," Mr. Lefeuvre said. As throngs shouted and blared horns, Mr. Hollande, in his acceptance speech, said he was on "a mission to give the European construction a growth dimension," and addressed Germany directly to act with him "in the name of our common responsibility." He has jolted the German establishment by vowing to press for a renegotiation of a European treaty on budget discipline into more of a pact by Europe to promote growth, amid criticism of austerity measures that has swept through the euro union. "Austerity cannot remain fatal!" he shouted to the crowd.