French president Franois Hollande dissolved his cabinet early this week and asked his prime minister, Manuel Valls, to name a new team.
The trigger for the move was a weekend interview with economy minister Arnaud Montebourg, a left-winger who lambasted the government's economic policy, especially the attempt to clamp down on the budget deficit.
The new economy minister is Emmanuel Macron, a former Rothschild investment banker who has already advised Hollande for several years. Other dissidents usually associated with the left of the Socialist Party have also gone.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
What the commentators said
Montebourg's departure should result in a more coherent approach to economic policy, as the FT pointed out. In his two years as president, Hollande has been "notoriously confused" about what he is trying to do. He came to office on a platform of taxing the rich.
Then in March he appointed Valls to drive reforms, such as cutting labour taxes and government spending. But he also gave Montebourg a bigger role, "allowing him a more prominent platform from which to attack the very policies that Valls was advocating. Something had to give."
It's a start, but France's ossified economy needs a lot more treatment. Employers in France pay the state around 40% of every salary they pay, compared to 12% here, said Charles Bremner in The Times.
Cutting red tape and deregulating protected professions is crucial. "Archaic costs and fee fixing" cost €6bn a year, and the French pay €205 more than their European neighbours for protected services. For instance, only pharmacies may sell painkillers, allowing the chemists to impose a large mark-up.
Yet, Hollande's reforms may now face trouble in parliament, as Montebourg's call for ditching austerity "resonates well beyond the left", said the FT. There could even be fresh elections, further delaying the overhaul the economy so urgently needs.
-
Should you invest in UK equities?The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
-
State pension errors: DWP urged to check for mistakes among divorced peopleFormer pensions minister Steve Webb says there are a high number of divorced women on low state pensions. Now MPs want the DWP to check if there were any errors in “potentially underpaying men and women who are divorced”.
