PARIS, April 02, 2014 (AFP) - French President Francois Hollande on Wednesday recalled his former partner Segolene Royal from the political wilderness to join a new, streamlined government, days after his Socialist Party suffered an election drubbing.
Sunday's stinging setback in nationwide municipal elections prompted Hollande to sack premier Jean-Marc Ayrault and replace him with tough-talking former interior minister Manuel Valls, 51.
The two wasted no time in radically reshaping the government, appointing two new faces in a cabinet of just 16 ministers -- less than half the 38 in the previous line-up -- faced with the mammoth challenges of bringing down unemployment and boosting almost non-existent growth whilst operating in tough budget constraints.
Royal, Hollande's ex-partner and mother of his four children, was named environment and energy minister in a spectacular return to mainstream politics for the woman who lost the 2007 presidential election to Nicolas Sarkozy.
"I am very honoured," she told France 3 television, pledging to work for economic recovery and jobs.
The 60-year-old is one of the Socialists' biggest hitters but her inclusion in Hollande's first cabinet was reportedly blocked because of hostility from Valerie Trierweiler, the president's then girlfriend.
That obstacle has now been removed following Hollande's separation from Trierweiler in January in the aftermath of the revelation of his affair with actress Julie Gayet.
- Finance ministry problems ahead? -
There was also major change at the finance ministry, in charge of sorting out an economy still blighted by stubbornly high unemployment and budget deficits after 22 months of Socialist rule.
Pierre Moscovici, who as finance and economy minister was unable to pull France out of the doldrums, was replaced by two contrasting politicians.
Former labour minister Michel Sapin, a supporter of budgetary rigour, was appointed to the powerful post of finance minister.
Left-wing firebrand Arnaud Montebourg, a prominent critic of globalisation seen by some as anti-business, was named economy minister, a promotion from his former brief of industrial renewal.
Opposition leader Jean-Francois Cope slammed these nominations, pointing out that Sapin failed to bring down the country's jobless numbers, which in February reached a record 3.34 million.
Montebourg has made headlines with his outspoken criticism of EU-backed austerity measures supported by Sapin and of neighbour and ally Germany, which he has blamed for factory closures in France.
"He is going to discuss our economic policy in Europe, particularly with the Germans whom he has copiously insulted for two years," Cope said.
Montebourg also grabbed headlines when he labelled the head of tyre giant Titan an "extremist" after the CEO criticised the French workforce as lazy, and got into a very public fight with steelmaker ArcelorMittal over the closure of a plant.
But for Bruno Jeanbart of research firm OpinionWay, Montebourg's appointment should not be seen as a concern as Hollande has already confirmed he will not deviate from his target of creating a more favourable environment for companies.
"In the short term, (Montebourg's appointment) will probably ease tensions and critics from the left (of the party)," he said, referring to those who believe Hollande has neglected social issues.
"But it's obvious that the line that will be followed will be Valls's."
The former interior minister is very clearly on the right of the governing party, having once proposed dropping "Socialist" from its name.
He is popular with voters across the political spectrum but his style and politics, often compared to those of former British premier Tony Blair, have alienated more left-leaning members of the party.
Already, the Green EELV party jumped ship, announcing that it "refuses to participate in a Valls government".
- A better communicator -
Ultimately, though, analysts expect that he will be able to run a tighter ship than his predecessor.
"He will bring what Jean-Marc Ayrault did not bring, which is quite a different personality than the president," said Jeanbart.
"The problem with the Hollande-Ayrault couple was that their personalities were too close, there was no contribution from the prime minister to the president and vice-versa," he said, adding Valls was also a much better communicator than either Hollande or Ayrault.
Hollande has tasked 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, to be financed by spending cuts of 50 billion euros ($69 billion).
He also asked him to set in motion a new "Solidarity Pact" that would include steps to boost spending on education and health and reduce personal income taxes.
Economists say the critical question is also whether the new government will continue to respect commitments to the European Union to reduce its public deficit from 4.3 percent to 3.0 percent of output, or put these targets aside and risk angering Brussels.
by Marianne BARRIAUX