By Richard Johnstone | 26 August 2014

A new government in France will be appointed today after Prime Minister Manuel Valls tendered the resignation of his administration in a row over the country’s austerity programme.

Valls, who was only appointed as prime minister by French president François Hollande in March, announced the dissolution of his Cabinet yesterday following a call by prominent ministers for a change of economic policy.

This came after economy minister Arnaud Montebourg gave a speech on Sunday that said France is ‘a free country which shouldn't be aligning itself with the obsessions of the German right’. He added that the country’s austerity programme, which forms part of the attempts to reduce the deficit to within the limits set by the eurozone’s stability and growth pact, were leading France down a ‘blind alley’.

Earlier this month, the French government admitted it would not reach its target to cut its deficit to 3.8% this year. The country has already negotiated a two-year delay to 2015 from 2013 to get the deficit within the pact’s limit of 3% of gross domestic product. It has now proposed an additional €50bn of spending cuts over the next two financial years, which are opposed by much of Hollande’s governing Socialist Party.

Following his speech, Montebourg was backed by education minister Benoit Hamon and culture minister Aurelie Filippetti, leading to Valls to offer the resignation of the government. Following the announcement, Hollande said Valls would appoint a new government ‘in line with the guidelines it has set itself for our country’.