Ex-banker named French economy minister in 'last chance' reshuffle

AFP

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French Government Dissolves Over Economic Policy

French Government Dissolves Over Economic Policy

French Government Dissolves Over Economic Policy

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Paris (AFP) - Francois Hollande on Tuesday installed a former banker and ally as economy minister in an emergency reshuffle seen as the "last chance" to haul France out of the biggest crisis of his presidency.

In a clear break with the left flank of his ruling Socialists, Hollande caught everyone off guard with the appointment of Emmanuel Macron, a 36-year-old ex-Rothschild banker and architect of the president's economic policy.

The top members of the government remained unchanged, but three rebel ministers who had publicly attacked Hollande's economic policy were not in the line-up as the president sought to quell dissenting voices in his team and cement the country's move towards a more pro-business outlook.

French Prime Minister Manuel Valls defended the choice of Macron and his Rothschild past, likely to be the target of sniping from the left.

"So what?" he retorted when asked on French television about Macron's banking background. "Can one not be an entrepreneur in this country? One can't be a banker?"

"To be strong in the world, you have to have a strong economy," insisted Valls, acknowledging that French growth had ground to a halt and unemployment was at "unacceptably" high levels.

The new minister has the unenviable task of pepping up Europe's second-biggest economy, which registered zero growth in the first six months of the year.

Finance Minister Michel Sapin and Foreign Minister Laurent Fabius were also confirmed in their posts and Segolene Royal, Hollande's former partner and the mother of his four children, stays environment and energy minister.

The reshuffle was seen as an attempt by Hollande, whose popularity is at a record low, to wrest back control of the political agenda, crush internal party rebellion and push forward his economic reform policies.

Leading daily Le Monde described the cabinet reshuffle as "the last chance for the president to save his five-year term."

The new government faces a host of challenges, not least a budget bill in parliament that will be watched very closely by the European Union, which has insisted France slash its ballooning budget deficit.

- 'One line' -

France's latest political crisis was sparked by a hasty government resignation on Monday after Valls and Hollande lost patience with former economy minister Arnaud Montebourg, an outspoken leftist firebrand, and his attacks on the country's economic direction.

"There is one line, and the members of the government cannot make a spectacle out of themselves," said Valls.

Reshuffling the government without the three rebel ministers -- Montebourg took two fellow leftists with him -- was "an act of authority," said the prime minister, seen as being on the right flank of the Socialists.

Montebourg insisted he was leaving on "amicable terms" with the prime minister, but the ejection of the three left-wing ministers from the cabinet raised fears of a wider split within Hollande's Socialist Party that could threaten his parliamentary majority.

Opposition figures said there was a major crisis of confidence at the heart of the executive, with far-right leader Marine Le Pen even calling for the lower house National Assembly to be dissolved.

Valls dismissed this however, pledging to hold a parliamentary vote of confidence in the government's policies "in September or in October."

"You will see, the majority will be there. There can be no other way. If the majority isn't there on that occasion, it would be finished. We couldn't finish our work," he said.

- Faster and further -

Caught in a trap of stagnating growth and high unemployment, Hollande is pinning his hopes on his Responsibility Pact -- a package of tax breaks for business funded by public spending cuts.

Hollande has pledged to cut social charges for companies in return for the promised creation of 500,000 jobs.

But with the current emphasis on austerity within Europe, France has vowed to counterbalance that with 50 billion euros ($66 billion) in cuts to public spending.

"The fact that the economy is today slower in Europe and in France does not mean that we should give up" on reforms, Hollande said in an interview last week.

"On the contrary, we need to go faster and further."

But the spending cuts in particular have raised hackles on the left of the French political spectrum, which sees austerity as a German-led policy that drags growth down and unemployment up.

And a recent survey by polling institute IFOP showed that more than eight in 10 French people had no confidence in the government when it came to economic growth, reducing the deficit or fighting unemployment.

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