France's troubled government quits

PRESIDENT François Hollande has ordered Prime Minister Manuel Valls to form a new cabinet, the Elysee Palace has announced.

It said that Mr Hollande, in his first full week back at work after his summer holidays, has told Mr Valls to form a new cabinet in line with the “direction the President has defined for the country.”

The announcement came after Mr Valls this morning presented his government's resignation to the President after two senior ministers publicly condemned its economic policies.

It added that a new government will be unveiled tomorrow.

Mr Valls’s government has only been in place since the end of March, and was formed when former Prime Minister Jean-Marc Ayrault resigned following a disastrous showing in the local elections.

In separate interviews over the weekend, both economy minister Arnaud Montebourg and education minister Benoît Hamon openly criticised the government’s plan to reduce the deficit instead of working to encourage growth.

In an interview with Le Monde on Saturday, Mr Montebourg called for a “change in our political choices”.

He argued that deficit-reduction measures - which he described as “economic madness” - were crippling the eurozone and urged governments to change course or lose voters to more extreme parties.

He said: “The priority must be exiting the crisis and the dogmatic reduction of deficits should come second.”

He added that France should no longer “be pushed around” by Berlin.

It has been reported that Mr Montebourg has been summoned to see the Prime Minister this evening. But this morning, he told Europe 1 radio that he had "no regrets" over his comments.

Mr Hamon criticised the government’s economic plans in an interview published by Le Parisien yesterday - though he insisted that he remained loyal to the government.

He said: “The revival of demand is the key to the success of the policy. Nothing can be sold to the French if they do not have sufficient income.”

It has been reported that justice minister Christiane Taubira sent a message of support to Mr Montebourg and Mr Hamon for speaking out, while culture minister Aurelie Filippetti also hinted that she backed the pair’s stance.

The apparent ministerial rebellion comes a matter of days after Mr Hollande and Mr Valls both insisted the government would not veer from its course of budget cuts.

It has also led to a number of calls for the National Assembly to be dissolved and new elections to be held.

Mr Montebourg is due to make a speech at 4pm.