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French PM Manuel Valls cabinet falls amid economy row French ministers resign in economy row
(about 7 hours later)
French President Francois Hollande has ordered PM Manuel Valls to form a new government after two senior ministers criticised their austerity policies. France's economy minister says he and two colleagues are leaving their posts amid a bitter row over economic policy.
After Mr Valls announced the cabinet's resignation, Mr Hollande immediately asked him to set up a new one. Arnaud Montebourg had publicly urged President Hollande's government to end austerity policies and focus on growth.
Economy minister Arnaud Montebourg and education minister Benoit Hamon are expected to lose their jobs. He was backed by Education Minister Benoit Hamon and Culture Minister Aurelie Filippetti.
They had both called for France to tackle low growth by resisting fiscal discipline imposed by Germany. Prime Minister Manuel Valls accused Mr Montebourg of crossing "a yellow line" and announced the resignation of his entire cabinet.
Offering his and the government's resignation, the prime minister said Mr Montebourg, a left-wing MP, had crossed "a yellow line". The move had apparently been agreed with President Francois Hollande, who immediately asked him to form a new government on Tuesday "consistent with the direction" he had set for the country.
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". France is struggling with high unemployment and low growth and President Francois Hollande's popularity is the lowest for a president in more than 50 years.
A French presidential source said Mr Valls's decision had been a matter of "absolute consensus" between President Hollande and the prime minister. Mr Montebourg told a news conference later on Monday he thought it necessary to speak out to try to avert the European Union's "descent into hell".
"I informed the prime minister.... that if he deemed my convictions counter to the direction of the government he leads, then in that case I thought it necessary for me to be let go."
Mr Hamon and Ms Filippetti had made the same choice, he added.
Hollande purges rebels - Lucy Williamson, BBC News, ParisHollande purges rebels - Lucy Williamson, BBC News, Paris
Francois Hollande is sending a clear message: 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.
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. Mr Montebourg, 51, is on the left wing of the governing Socialist party, and has campaigned against globalisation.
On Saturday, he told Le Monde newspaper that Germany was trapped in an austerity policy that it imposed across Europe". He came third in the party's contest for presidential candidate in 2011.
He was backed up by education minister Benoit Hamon and appeared also to have the support of culture minister Aurelie Filippetti. He told Le Monde newspaper that Germany was trapped in an austerity policy that it had imposed across Europe and spoke at a meeting with Mr Hamon in eastern France on Sunday, with the support of Culture Minister Aurelie Filippetti.
Mr Hamon called on Sunday for a revival in demand and for an end to German Chancellor Angela Merkel setting Europe's direction. Mr Hamon called on Sunday for a revival in demand, and for an end to German Chancellor Angela Merkel setting Europe's direction.
All three ministers were set to lose their jobs in Tuesday's reshuffle, Le Point reported, along with Justice Minister Christiane Taubira.
Manuel Valls became prime minister in March, replacing Jean-Marc Ayrault, after a poor performance by President Hollande's Socialist party in local elections.Manuel Valls became prime minister in March, replacing Jean-Marc Ayrault, after a poor performance by President Hollande's Socialist party in local elections.
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. Earlier this month the French government admitted it would be impossible to reach a previous growth forecast of 1%.
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". Germany saw its economy shrink by 0.2% between April and June.
He was due to speak publicly later on Monday. Mr Hollande's political opponents have been quick to round on the president:
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.Mr Hollande's poll ratings have sunk to 17%, while Mr Valls' have dropped to 36%, according to an Ifop poll published on Sunday.