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French PM to unveil pro-reform cabinet

2014-08-26 11:37

Paris - France's prime minister will scramble to put together a new pro-reform government on Tuesday, a day after the surprise eviction of rebel ministers who had opposed budgetary rigour.

Manuel Valls will seek as wide a basis as possible for his second cabinet in five months ahead of tough negotiations at home and with EU peers on France's 2015 budget and he is expected to try to poach politicians from other parties.

Valls handed in his government's resignation on Monday after President Francois Hollande decided firebrand Economy Minister Arnaud Montebourg had gone one step too far by attacking his economic policies and Germany's "obsession" with austerity.

'Regime crisis'

Two of France's leading newspapers, the conservative Le Figaro and left-wing Liberation, summed up the mood on Tuesday with the exact same headline: "Regime crisis".

"Attacked in his own camp, victim of abysmal unpopularity, Francois Hollande is confronted with an unprecedented crisis," Le Figaro wrote on its front page, showing Hollande standing alone, drenched in rain during a World War Two commemoration ceremony.

Hollande, France's most unpopular president in polling history, remained silent on Monday about the government reshuffle as Montebourg accused him of putting the country at risk with his economic policy.

Hollande drew a parallel with France in 1944 - "a country in ruins which found in itself the strength to pull itself up".

"We will obtain nothing without efforts, without abnegation, without courage ... Even in the most difficult times, (political) will triumphs," the president said, adding that now, as then, the sole objective should be recovering France's competitiveness to "ensure its independence".

Political Risk

The euro zone's second-largest economy is mired in stagnation and the government has admitted it will not meet key fiscal targets due to the lack of growth and weaker-than-expected inflation.

Economists gave a guarded welcome to Montebourg's eviction, hoping it would bring a sharper focus to government.

"This represents a welcome clarification of the economic strategy but it increases the risk of a political crisis," Barclays economist Philippe Gudin said.

He said the most likely scenario would be for self-proclaimed rebel lawmakers in the ruling Socialist party to keep criticising Hollande's policies but without forcing snap elections - if only for fear of losing their own seats.

But one of the lead "rebel" lawmakers, Christian Paul, told BFM television that "nothing was excluded" for the weeks to come, slamming the government's "inefficient and unfair policy".

Montebourg, aged 51, an anti-globalisation campaigner who has often courted controversy in his time as minister since Hollande took power in 2012, told TF1 television he had not expected events to accelerate so quickly - a sign he may not have expected his latest comments to lead to his dismissal.

But he renewed his hard-hitting criticism of an economic policy based on cutting the public deficit and kickstarting growth by cuts in state spending totalling 50 billion euros and tax cuts for businesses over the next few years of 40 billion.

"The whole world is begging us to put an end to these absurd austerity policies which are burying the euro zone deeper and deeper in recession and which will soon end up with deflation," he told a news conference on Monday at the finance ministry.

Reuters
Read more on:    francois hollande france

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