French government resigns amid bitter austerity feud

France was thrown into fresh political turmoil Monday after President Francois Hollande dissolved the government amid feuding among cabinet members over the country’s economic austerity measures.

Prime Minister Manuel Valls offered up his Socialist government's resignation after accusing the outspoken economy minister of crossing a line by issuing a blunt criticism of his policies and urging “just and sane” resistance to German-inspired austerity.

Hollande accepted the resignation and ordered Valls to form a new government by Tuesday.

It comes amid growing discontent with the French government’s economic measures.

France has had effectively no economic growth this year, unemployment is hovering around 10 percent, and Hollande's approval ratings are in the teens. The country is under pressure from the European Union to get its finances in order, but Economy Minister Arnaud Montebourg has questioned whether the austerity pressed by the EU will kick start French growth.

Hollande's promises to cut taxes and make it easier for businesses to open and operate have stalled, meanwhile, in large part because of the divisions among Socialists.

"A major change in our economy policy" was needed, Montebourg said in comments that come just days after Hollande had expressly said there would be no change in direction.

The minister's comments angered the Socialist leadership, which said Montebourg's job was to support the government, not criticize it from within.

"He's not there to start a debate but to put France back on the path of growth," Carlos Da Silva, the Socialist Party spokesman, told Le Figaro newspaper.

"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.

Montebourg's criticism of austerity — and his pointed remarks about German Chancellor Angela Merkel — have rankled before.

In an interview last week, after Germany's economy also showed signs of stagnation, Montebourg said France's neighbor had been "trapped by the policy of austerity." He went on to say "when I say Germany, I mean the German right-wing that supports Angela Merkel. It's not France's job to align itself to the ideological axioms of Germany's right-wing."

Montebourg is seen as representing the Socialist’s party’s hard-left base, and his departure from the government is likely to anger many of the voters who brought Hollande to office in 2012. Since that time, France's economy has only worsened, and the sense of impending crisis weighs heavily.

French officials have already made clear that the deficit will again surpass the 3 percent target set by the European Union, and are negotiating a delay.

Merkel on Monday declined to comment directly about the change in government but said she wishes "the French president success with his reform agenda."

Analysts said the showdown suggested the 51-year-old Montebourg — who this year forced General Electric to sweeten its offer for French industrial icon Alstrom's turbine business — was looking to disassociate himself from Hollande and rally the country's splintered left behind a rival presidential bid.

"Montebourg's exit resonates like real ambition for 2017, that's clear. It's a real political coup," said Martial Foucault, director of the Cevipof think tank.

Foucault forecast that the government to be named by Valls on Tuesday would be more centrist in tone but noted: "You need ministers who are capable of speaking with unions, employers and Germany, and, I admit, there are not a lot of alternatives."

Wire services