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French PM Manuel Valls resigns amid economy row French PM Manuel Valls cabinet falls amid economy row
(about 2 hours later)
French PM Manuel Valls has submitted the government's resignation to President Francois Hollande and has been asked to form a new cabinet. French President Francois Hollande has ordered PM Manuel Valls to form a new government after two senior ministers criticised their austerity policies.
The government was badly shaken on Sunday by criticism over its handling of the economy by economy minister Arnaud Montebourg. After Mr Valls announced the cabinet's resignation, Mr Hollande immediately asked him to set up a new one.
Moments after Mr Valls's resignation Mr Hollande issued a statement. Economy minister Arnaud Montebourg and education minister Benoit Hamon are expected to lose their jobs.
He asked Mr Valls to set up a new cabinet "consistent with the direction [Mr Hollande] has set for the country". They had both called for France to tackle low growth by resisting fiscal discipline imposed by Germany.
The prime minister had accused Mr Montebourg of "crossing a yellow line" after the economy minister had attacked austerity measures which he said were strangling France's growth. Offering his and the government's resignation, the prime minister said Mr Montebourg, a left-wing MP, had crossed "a yellow line".
Mr Montebourg told a meeting of Socialists in eastern France that the time had come to put up a "just and sane resistance" to the "excessive obsessions of Germany's conservatives". Moments later, the president issued a statement asking him to set up a new government "consistent with the direction [Mr Hollande] has set for the country".
A French presidential source said Mr Valls's decision had been a matter of "absolute consensus" between President Hollande and the prime minister.
Hollande purges rebels - Lucy Williamson, BBC News, ParisHollande purges rebels - Lucy Williamson, BBC News, Paris
Francois Hollande is sending a clear message: that dissenters within the party will not be tolerated at this difficult economic moment. Francois Hollande is sending a clear message: dissenters within the party will not be tolerated at this difficult economic moment.
But the decision to dissolve the government is also a sign of how much is at stake for him.But the decision to dissolve the government is also a sign of how much is at stake for him.
With unemployment running at more than 10%, growth stagnant, and polls suggesting that less than 20% of voters think he can turn the economy around, Mr Hollande is facing a difficult autumn.With unemployment running at more than 10%, growth stagnant, and polls suggesting that less than 20% of voters think he can turn the economy around, Mr Hollande is facing a difficult autumn.
His plan has been to cut spending in order to fund tax cuts for business, in the hope of boosting the economy, but there are those in his party who disagree.His plan has been to cut spending in order to fund tax cuts for business, in the hope of boosting the economy, but there are those in his party who disagree.
They want less focus on austerity, and more money funnelled direct to households. Purging the rebels is an eye-catching move, but with his popularity at an all-time low, Mr Hollande cannot afford to look weak.They want less focus on austerity, and more money funnelled direct to households. Purging the rebels is an eye-catching move, but with his popularity at an all-time low, Mr Hollande cannot afford to look weak.
On Saturday, Mr Montebourg told Le Monde newspaper that Germany was trapped in an austerity policy that it imposed across Europe". Arnaud Montebourg, 51, is on the left wing of the French Socialists and has campaigned against globalisation. He came third in the party's contest for presidential candidate in 2011.
He was backed up by education minister Benoit Hamon and appeared to have the support of culture minister Aurelie Filippetti, too. On Saturday, he told Le Monde newspaper that Germany was trapped in an austerity policy that it imposed across Europe".
Mr Hamon called on Sunday for a revival in demand and for an end to German Chancellor Angela Merkel setting Europe's direction: "You can't sell anything to the French if they don't have enough income," he said. He was backed up by education minister Benoit Hamon and appeared also to have the support of culture minister Aurelie Filippetti.
Manuel Valls became prime minister in March after a poor performance by President Hollande's Socialist party in local elections. Mr Hamon called on Sunday for a revival in demand and for an end to German Chancellor Angela Merkel setting Europe's direction.
Earlier this month, the French government admitted it would be impossible to reach a previous growth forecast of 1%. Germany saw its economy shrink by 0.2% between April and June. All three ministers were set to lose their jobs in Tuesday's reshuffle, Le Point reported, along with Justice Minister Christiane Taubira.
Mr Montebourg told French radio shortly before Mr Valls announced the government's resignation that he had no regrets about his remarks, "first of all because there's no anger". Manuel Valls became prime minister in March, replacing Jean-Marc Ayrault, after a poor performance by President Hollande's Socialist party in local elections.
There was no debate about authority, he told Europe 1 radio, but a "debate about economic direction". Earlier this month the French government admitted it would be impossible to reach a previous growth forecast of 1%. Germany saw its economy shrink by 0.2% between April and June.
Mr Montebourg told French radio shortly before Mr Valls announced the government's resignation that he had no regrets about his remarks, in which he called for a "just and sane resistance" to the "excessive obsessions of Germany's conservatives".
He was due to speak publicly later on Monday.
Francois Hollande's political opponents were quick to round on the president:
Mr Hollande's poll ratings have sunk to 17%, while Mr Valls' have dropped to 36%, according to an Ifop poll published on Sunday.