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| New French Cabinet Sheds Critics and Leaves Austerity Policies in Place | New French Cabinet Sheds Critics and Leaves Austerity Policies in Place |
| (about 7 hours later) | |
| PARIS — The new government approved Tuesday by President François Hollande squelched important voices of dissent on the left wing of his Socialist Party but signaled little change of direction on economic policies that critics say have left the French economy mired in stagnation. | |
| The marginal changes, analysts said, mean that France, Europe’s second-largest economy, after Germany, could be in for a long slog, with consequences for both Mr. Hollande’s already weak political standing and the wider European economy. | The marginal changes, analysts said, mean that France, Europe’s second-largest economy, after Germany, could be in for a long slog, with consequences for both Mr. Hollande’s already weak political standing and the wider European economy. |
| “He is changing the government without changing the direction of policy, which is a bad thing,” said Jean-Paul Fitoussi, a professor of economics at the Institut d'Études Politiques de Paris. “We are in a world of uncertainty, and they need to be reactive to a dangerous new phenomenon that has appeared, which is stagnant growth.” | |
| After publicly criticizing Mr. Hollande’s economic policies, Arnaud Montebourg, France’s combative economy minister and a prominent voice of the left wing of the governing Socialist Party, was pushed out in the reshuffling — the second cabinet shake-up in six months. | After publicly criticizing Mr. Hollande’s economic policies, Arnaud Montebourg, France’s combative economy minister and a prominent voice of the left wing of the governing Socialist Party, was pushed out in the reshuffling — the second cabinet shake-up in six months. |
| Making clear that he and the president would brook little dissent, Prime Minister Manuel Valls kept a trusted lieutenant, Michel Sapin, a career politician and close friend of Mr. Hollande, as finance minister. | Making clear that he and the president would brook little dissent, Prime Minister Manuel Valls kept a trusted lieutenant, Michel Sapin, a career politician and close friend of Mr. Hollande, as finance minister. |
| And he named Emmanuel Macron, 36, a former investment banker at Rothschild and a deputy secretary general at the Élysée Palace who has been a close adviser to Mr. Hollande on economic policies, as the new economy minister, replacing Mr. Montebourg. | And he named Emmanuel Macron, 36, a former investment banker at Rothschild and a deputy secretary general at the Élysée Palace who has been a close adviser to Mr. Hollande on economic policies, as the new economy minister, replacing Mr. Montebourg. |
| Yet in a sign that Mr. Valls is seeking to ensure his party’s backing, he asked Parliament on Tuesday to hold a rare vote of confidence in the new government in September or October. “The majority will have to be there,” he said of the vote in an interview on French television. “If we don’t get a majority, it’s over — we cannot continue.” | Yet in a sign that Mr. Valls is seeking to ensure his party’s backing, he asked Parliament on Tuesday to hold a rare vote of confidence in the new government in September or October. “The majority will have to be there,” he said of the vote in an interview on French television. “If we don’t get a majority, it’s over — we cannot continue.” |
| Both men were expected to press ahead with Mr. Hollande’s economic program, including a package of spending cuts totaling 50 billion euros, or $66 billion, through 2017, and a package of tax measures for employers designed to stoke hiring. | Both men were expected to press ahead with Mr. Hollande’s economic program, including a package of spending cuts totaling 50 billion euros, or $66 billion, through 2017, and a package of tax measures for employers designed to stoke hiring. |
| The moves appeared to trim the ideological breadth of the cabinet at the expense of the left. But analysts expected that would do little to alter the course Mr. Hollande has plotted in trying to keep his party with him while also appeasing European Union officials who want countries to mend their public finances by reducing budgets. | The moves appeared to trim the ideological breadth of the cabinet at the expense of the left. But analysts expected that would do little to alter the course Mr. Hollande has plotted in trying to keep his party with him while also appeasing European Union officials who want countries to mend their public finances by reducing budgets. |
| Mr. Hollande has tried to walk a line between the two camps, and watched his public standing dwindle. His policies have stoked ire from both the left and from French businesses and international investors, who say he has not gone far enough to revive the nation’s competitiveness. | Mr. Hollande has tried to walk a line between the two camps, and watched his public standing dwindle. His policies have stoked ire from both the left and from French businesses and international investors, who say he has not gone far enough to revive the nation’s competitiveness. |
| If nothing else, the crisis has made more apparent the competing forces that have tugged at Mr. Hollande since the beginning of his term in 2012. It has also highlighted the limited policy tools available to him in an atmosphere, in France and in much of the rest of Europe, of high public debt, persistent unemployment and stagnant growth that threatens to transform the five-year euro crisis into a chronic economic illness. | If nothing else, the crisis has made more apparent the competing forces that have tugged at Mr. Hollande since the beginning of his term in 2012. It has also highlighted the limited policy tools available to him in an atmosphere, in France and in much of the rest of Europe, of high public debt, persistent unemployment and stagnant growth that threatens to transform the five-year euro crisis into a chronic economic illness. |
| Analysts said they expected the new government to push ahead with more of Mr. Hollande’s austerity measures, which were necessary to help reduce France’s deficit. Critics say the measures have thwarted an economic recovery after nearly a year of stagnant growth and high unemployment, which hovers above 10 percent. | Analysts said they expected the new government to push ahead with more of Mr. Hollande’s austerity measures, which were necessary to help reduce France’s deficit. Critics say the measures have thwarted an economic recovery after nearly a year of stagnant growth and high unemployment, which hovers above 10 percent. |
| Politically, the early judgments on the reshuffling were gloomy as jockeying began for the next presidential elections in 2017, cementing Mr. Hollande’s image as an ineffective politician who now faces the added risk of seeing his party base further erode. | Politically, the early judgments on the reshuffling were gloomy as jockeying began for the next presidential elections in 2017, cementing Mr. Hollande’s image as an ineffective politician who now faces the added risk of seeing his party base further erode. |
| Simon Tilford, an economist who is deputy director of the Center for European Reform, a research institute in London, said that the latest French political crisis would invariably also diminish Mr. Hollande in Brussels in favor of Germany’s chancellor, Angela Merkel. It was her insistence on austerity that helped spur the divisions that led to the French crisis. | Simon Tilford, an economist who is deputy director of the Center for European Reform, a research institute in London, said that the latest French political crisis would invariably also diminish Mr. Hollande in Brussels in favor of Germany’s chancellor, Angela Merkel. It was her insistence on austerity that helped spur the divisions that led to the French crisis. |
| “In terms of the way Hollande is perceived abroad, this will reinforce the perception that he is a weak leader who is unable to marshal his troops effectively,” Mr. Tilford said. | “In terms of the way Hollande is perceived abroad, this will reinforce the perception that he is a weak leader who is unable to marshal his troops effectively,” Mr. Tilford said. |
| At home, the abruptness and upheaval caused by the crisis were a fresh blow to Mr. Hollande at a time when his popularity ratings are already at record lows, and disillusioned voters show signs of defecting to other parties, including the far-right National Front. | At home, the abruptness and upheaval caused by the crisis were a fresh blow to Mr. Hollande at a time when his popularity ratings are already at record lows, and disillusioned voters show signs of defecting to other parties, including the far-right National Front. |
| Françoise Fressoz, an editorial writer for Le Monde, wrote in a blog post on Tuesday that the reshuffle showed a structural flaw within the Socialist Party. | Françoise Fressoz, an editorial writer for Le Monde, wrote in a blog post on Tuesday that the reshuffle showed a structural flaw within the Socialist Party. |
| “This is a crisis that shows the weakness of the left, its amateurism, its lack of preparation when faced with a crisis, and its inability to work together to collectively overcome it,” she wrote. “There is not much authority left for the French president.” | “This is a crisis that shows the weakness of the left, its amateurism, its lack of preparation when faced with a crisis, and its inability to work together to collectively overcome it,” she wrote. “There is not much authority left for the French president.” |
| While the prospect of change may rest with Mr. Sapin and Mr. Macron, both are close allies of Mr. Hollande and are unlikely to voice much dissent. | While the prospect of change may rest with Mr. Sapin and Mr. Macron, both are close allies of Mr. Hollande and are unlikely to voice much dissent. |
| The newspaper La Tribune called Mr. Macron, who formerly worked at the French Treasury, “an anti-Montebourg” who was expected to “defend the official line.” Known for a market-friendly approach, he played a significant role in advising Mr. Hollande during his presidential campaign, promoting an economic policy based on supply and support to companies. | The newspaper La Tribune called Mr. Macron, who formerly worked at the French Treasury, “an anti-Montebourg” who was expected to “defend the official line.” Known for a market-friendly approach, he played a significant role in advising Mr. Hollande during his presidential campaign, promoting an economic policy based on supply and support to companies. |
| “He stands plainly for everything that Montebourg was opposed to,” Antonio Barroso, a senior vice president at the advisory firm Teneo Intelligence, said in a note to clients. “His appointment will reduce the potential for dissonant opinions inside the government and help Valls to push ahead with his policy agenda.” | “He stands plainly for everything that Montebourg was opposed to,” Antonio Barroso, a senior vice president at the advisory firm Teneo Intelligence, said in a note to clients. “His appointment will reduce the potential for dissonant opinions inside the government and help Valls to push ahead with his policy agenda.” |
| Like nearly every member of the French cabinet, Mr. Sapin, who attended an elite French university with Mr. Hollande, has never worked in business. He is better versed in the nuances of European politics, having gotten his start in the early 1990s, when, as finance minister under President François Mitterrand, also a Socialist, he managed the referendum campaign to persuade the French to join in the creation of the euro. | Like nearly every member of the French cabinet, Mr. Sapin, who attended an elite French university with Mr. Hollande, has never worked in business. He is better versed in the nuances of European politics, having gotten his start in the early 1990s, when, as finance minister under President François Mitterrand, also a Socialist, he managed the referendum campaign to persuade the French to join in the creation of the euro. |
| While Mr. Montebourg had warned that the austerity program would only suppress a recovery, others said it was important for the president to make some progress in curbing runaway government spending. | While Mr. Montebourg had warned that the austerity program would only suppress a recovery, others said it was important for the president to make some progress in curbing runaway government spending. |
| “Fifty billion in three years is massive for France, so it’s a positive sign that Mr. Hollande is committed to continuing what he’s doing,” said Famke Krumbmüller, a Europe analyst at the Eurasia Group in London. “The only alternative would be to do much less to please the left wing of his party.” | “Fifty billion in three years is massive for France, so it’s a positive sign that Mr. Hollande is committed to continuing what he’s doing,” said Famke Krumbmüller, a Europe analyst at the Eurasia Group in London. “The only alternative would be to do much less to please the left wing of his party.” |
| With growth so tepid, Mr. Sapin has already warned France’s European partners that the government can no longer meet its deficit targets, and he is expected to continue pressing the European Union and Germany for more flexibility on fiscal rules. | With growth so tepid, Mr. Sapin has already warned France’s European partners that the government can no longer meet its deficit targets, and he is expected to continue pressing the European Union and Germany for more flexibility on fiscal rules. |
| Still, in an interview in July, Mr. Sapin rejected the notion that France risked becoming the next sick man of Europe. “We don’t see it like that,” he said. “France is a huge economy in Europe, with an industrial base, innovation and research. I don’t see how we can be sick — or at least sick for a long time.” | Still, in an interview in July, Mr. Sapin rejected the notion that France risked becoming the next sick man of Europe. “We don’t see it like that,” he said. “France is a huge economy in Europe, with an industrial base, innovation and research. I don’t see how we can be sick — or at least sick for a long time.” |