French govt resigns amid split on policy

Written by Reuters | Paris | Updated: Aug 26 2014, 08:30am hrs
French Prime Minister Manuel Valls presented his governments resignation on Monday, a day after economy minister Arnaud Montebourg called for new economic policies and questioned neighbour Germany's obsession with budgetary rigour. Valls was asked by President Francois Hollande to form a new team only four months ago but has continually had to reconcile policy differences between leftists such as Montebourg and more centrist members of his Socialist-led government.

Hollandes office said in a statement a new government would be formed on Tuesday in line with the direction he (the president) has defined for our country.

Montebourg at the weekend said deficit-reduction measures carried out since the 2008 financial crisis were crippling the euro zones economies and urged governments to change course or lose their voters to populist and extremist parties. Finance minister Michel Sapin acknowledged that weak growth would mean France missing its deficit-reduction target for this year but stressed the government would cut the deficit at an appropriate pace.