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French Govt falls amid economy row

Monday, August 25 16:22:48

French President Francois Hollande asked his prime minister today to form a new government, looking to impose his will on the cabinet after rebel leftist ministers had called for an economic policy U-turn.

The surprise move came the day after outspoken Economy Minister Arnaud Montebourg had condemned what he called fiscal "austerity" and attacked euro zone powerhouse Germany's "obsession" with budgetary rigour.

In a terse statement, 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 taking 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 Valls would continue trying to revive the euro zone's second largest economy with tax cuts for businesses while slowly reining in its public deficit by trimming spending.

France has lagged other euro zone economies in emerging from a recent slowdown, fuelling frustration over Hollande's leadership, both within his Socialist party and further afield.

The new cabinet will be announced on Tuesday and there was no immediate word on who would stay and who would go. Local media reported that left-wing Culture Minister Aurelie Filipetti had signalled she did not want a post in the new government.

If Hollande decided to sack Montebourg, who is viewed as a potential presidential rival, he would risk seeing the ousted minister take with him a band of rebel lawmakers and deprive him of the parliamentary majority he needs to push through reforms.

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

"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," said former Prime Minister Francois Fillon, one of handful of hopefuls for the conservative ticket in the 2017 presidential election.

"The big question with this reshuffle is whether Francois Hollande will still have a parliamentary majority," Frederic Dabi of pollster Ifop told i>Tele.

In a confidence vote in April, Valls' government scored 306 votes - above the 289 votes needed for an absolute majority - with the help of smaller allied parties. (Reuters)

For more visit: www.businessworld.ie