Hollande tries to regain grip on government

FRENCH president François Hollande has asked his prime minister to form a new government, looking to impose his will on the cabinet after rebel leftist ministers called for an economic policy U-turn.

Mr Hollande at a Second World War memorial event yesterday. Picture: Getty

The surprise move came the day after outspoken economy minister Arnaud Montebourg had condemned what he called fiscal “austerity” and attacked ­eurozone powerhouse Germany’s “obsession” with budgetary rigour.

In a terse statement yesterday, Mr Hollande’s office said prime minister Manuel Valls had handed in his government’s resignation, opening the way for a reshuffle just four months after it took office.

“The head of state asked him to form a team that supports the objectives he has set out for the country,” the statement said, suggesting Mr Valls would continue trying to revive the eurozone’s second largest economy with tax cuts for businesses while slowly reining in its public deficit by trimming spending.

France has lagged behind other eurozone economies in emerging from a recent slowdown, fuelling frustration over Mr Hollande’s leadership, both within his Socialist party and more widely.

The new cabinet will be announced today, though there was no firm indication last night of who would stay and who would go. If Mr Hollande decided to sack Mr Montebourg, who is viewed as a potential presidential rival, he would risk seeing the ousted minister take with him a band of rebel politicians and deprive Mr Hollande of the parliamentary majority he needs to push through reforms.

Opposition conservatives – who for weeks have been embroiled in their own leadership rows – have called for an outright dissolution of parliament, as have the far-right National Front.

Former prime minister François Fillon said: “With half of the presidential mandate already gone, it doesn’t bode well for the ability of the president, or whatever government he chooses, to take key decisions.”

Mr Fillon is one of a handful of hopefuls vying for the conservative nomination in the 2017 presidential election.

A survey released at the weekend showed Mr Hollande’s poll ratings stuck at 17 per cent, the lowest for any leader of France since its Fifth Republic was formed in 1958.

Mr Valls, a once-popular interior minister, saw his own popularity eroded by his failure to tackle unemployment, which is stuck above 10 per cent.

Mr Montebourg has emerged as the most visible leader of the left since Mr Hollande adopted a more pro-business line in January to try to boost the economy with corporate tax breaks.

The president has also sought to repair ties with German chancellor Angela Merkel’s conservatives, a relationship that has been strained by France’s repeated failures to meet budgetary targets agreed with the European Commission.

Speaking at a meeting of Socialists on Sunday, Mr Montebourg said that deficit reduction measures carried out since the 2008 financial crisis had crippled eurozone economies and he urged governments to change course or lose votes to populist and extremist parties.

“The time has come for us to take on an alternative leadership, to set up an alternative motor,” he said.

European Union policymakers have in recent weeks acknowledged that the bloc’s rules on budget consolidation should be followed with flexibility, while earlier this month France conceded that stagnant growth meant it would miss its 2014 budget target.

Analysts said that the showdown suggested that Mr Montebourg was looking to disassociate himself from Mr Hollande and rally the country’s splintered left behind a rival presidential bid.

Martial Foucault, director of Paris-based think-tank Cevipof, said: “Montebourg’s exit resonates like real ambition for 2017. It’s a real political coup.”