French PM presents govt resignation

PARIS, Aug 25 (agencies): France's Prime Minister Manuel Valls presented the resignation of his government to the president Monday, Francois Hollande's office said in a statement.

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

The move comes a day after leftist Economy Minister Arnaud Montebourg called for new economic policies and questioned what he called Germany's "obsession" with budgetary rigor.

Earlier report adds: France was thrown into fresh crisis Monday after President Francois Hollande told his prime minister to form a new government, following a high-profile show of insubordination by the country's firebrand economy minister. It is the second reshuffle in just five months as the ruling Socialists struggle to pull France out of the economic doldrums and the party is riven by infighting over what direction to take to reduce sky-high unemployment and boost sorely-needed growth.

The shock move caught France by surprise and opposition figures pointed to a major crisis of confidence at the heart of the deeply unpopular executive, with far-right leader Marine Le Pen even calling for the lower house National Assembly to be dissolved. A presidency statement said Prime Minister Manuel Valls had offered the resignation of his government-a formality that allows him to form a new cabinet-and the new line-up would be announced on Tuesday.

The presidency did not give any reasons for the shock move, but it came after Economy Minister Arnaud Montebourg bad-mouthed France's economic direction and the austerity policies of European powerhouse and ally Germany, angering Valls.

Then in a speech on Sunday, Montebourg said he had asked Hollande and Valls for a "major shift" in economic policy.

While it is as yet unclear whether Montebourg will remain in the government, it appears increasingly unlikely.

On Monday, Valls-who has consistently said he will not tolerate any insubordination from his ministers-was busy meeting every member of the former cabinet, including Montebourg.

The 51-year-old left-wing minister is no stranger to controversy, having made headlines in the past for his outspoken criticism of ally Germany, which he has blamed for factory closures in France.

He was promoted to his current position in April in a government shake-up after the Socialist party suffered a drubbing at local elections, and has had to cosy up to Finance Minister Michel Sapin who supports the very austerity measures that he disagrees with.