French Prime Minister Moves to Dissolve Cabinet

PARIS - French politics was thrown into disarray on Monday when Prime Minister Manuel Valls announced plans to dissolve the government after a rancorous battle in his cabinet over the future direction of the economy.

French news media reported that Mr. Valls had threatened to resign unless President François Hollande ordered a shake-up of the government after the economy minister, Arnaud Montebourg, challenged the government's economic policies. Mr. Montebourg argued that budgetary austerity was undermining growth and hobbling the eurozone's recovery.

'It's either him or me,' Mr. Valls said to Mr. Hollande, according to the French newspaper Le Monde.

The new government is to be formed on Tuesday, and Mr. Valls is expected to remain as prime minister.

The move underlined a wider debate in Europe between Germany, which advocates budgetary austerity as necessary medicine to restore sluggish economies, and critics like Mr. Montebourg who argue that stringent fiscal measures are stifling Europe, including France.

The government shake-up also exposed the challenge faced by Mr. Hollande from the left wing of his party as he struggles to revive France's flat economy. Mr. Valls was initially a relatively popular prime minister, but his support has diminished as the economy has faltered, while Mr. Hollande is one of the most unpopular presidents in decades, according to recent polls.

Mr. Hollande took office two years ago, and the economy has been stagnant since, with unemployment now above 10 percent. Opinion polls show that four out of five French people are unsatisfied with Mr. Hollande's stewardship of the economy. But the straitjacket of the European Union's austerity policies has left the government little leeway to employ the kind of growth measures that many economists say are necessary to restore domestic demand.

The turmoil in the Socialist government comes as the center-right is mired in a leadership crisis and the ascendant far-right National Front is seeking to fill the electoral vacuum. In making his plea for a change in economic policy, Mr. Montebourg said over the weekend that if the government did not change direction, it risked losing support to populist or extremist parties.

Pascal Perrineau, a professor at the Institut d'Études Politiques of Paris, said that the government resignation was a potent sign of open rebellion within the Socialist Party and the struggle the government faces to maintain its parliamentary majority when elections are held in 2017. But he said it also showed that Mr. Hollande was unwilling to cave into demands from the hard left of his party.

'Mr. Hollande is sending a message at the national and international level that France will not change its economic direction at a time of great political and economic weakness in France,' Mr. Perrineau said.