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New French PM forms government

PARIS---France's new Prime Minister Manuel Valls faced a delicate balancing act Tuesday as he set about forming a new government tasked with reviving the economy and reining in public finances.

President Francois Hollande nominated the tough-talking interior minister to the post on Monday after the ruling Socialists suffered a drubbing at municipal polls, replacing incumbent Jean-Marc Ayrault who had headed up a deeply unpopular government.

Valls's firm stance on crime and his dynamism have won him respect from voters across the political spectrum, but the nomination of the 51-year-old — considered on the right of the Socialist Party — has antagonized some ministers who have preemptively refused to take part in his new government.

Valls is arriving at a time of “very complicated economic conditions,” said Frederic Dabi of the IFOP polling institute.

Valls faces the challenge of “an economic context that has deteriorated sharply,” he added, with unemployment and a public deficit that remain stubbornly high after nearly two years of Socialist rule.

Growth, meanwhile, is almost non-existent and the exasperation of the French was reflected in Sunday's municipal polls that saw the Socialists lose a mammoth 155 towns and cities to the main opposition and far right.

In a televised address on Monday, Hollande charged Valls with implementing a package of pro-business policies known as the Responsibility Pact, which cuts taxes on firms that are widely viewed as hampering employment and growth, and imposes spending cuts of 50 billion euros (US$69 billion).

At the same time, he also asked him to put in motion a new “Solidarity Pact” that would include steps to boost spending on education and health and reduce personal income taxes.

Divisions Within Socialist Party

Aside from the realities of a dire economic situation, Valls also has the challenge of ironing out divisions within the French left, particularly those who feel that the Socialists have adopted a pro-business stance.

Already ministers Cecile Duflot and Pascal Canfin have announced they will not be part of Valls's government, and the EELV green party they belong to says it has not yet decided whether to remain in the governing coalition.

“Since he has been a government member, Manuel Valls has never expressed his views on the economy, on ecology, on social issues,” Francois de Rugy, an EELV lawmaker, told Europe 1 radio.

Valls, who is officially due to take over from Ayrault in a ceremony at 1300 GMT, met with an EELV delegation early Tuesday, Green Senator Jean-Vincent Place told AFP.

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Socialist Party candidate for the 2012 French presidential election, Francois Hollande, right, talks with his campaign communications director, Manuel Valls, in Le Bourget, outside Paris on Jan. 22, 2012. (AFP)

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