French government dissolves over economic policy

AP 8/25/2014 5:06:52 PM

PARIS (AP) — President Francois Hollande is weighing his options after dissolving the government on Monday over open feuding in the Cabinet about how much cutting — or spending — will revive the country's stagnant economy.

Hollande is to announce a new government on Tuesday. The debate among French Socialists mirrors one taking place across Europe on whether to pursue a German-led model of fiscal austerity or use more government spending to spur growth.

Prime Minister Manuel Valls offered up his Socialist government's resignation after accusing France's outspoken economy minister of crossing a line with his blunt criticism of the government's policies. Hollande accepted the resignation and ordered Valls to form a new government by Tuesday.

Hollande has promised cuts to taxes and spending as well as reforms to make it easier for businesses to open and operate. The measures are meant to reduce the tax burden for companies and also contain the government's deficit, which is above the European Union's limit of 3 percent of GDP.

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