- Hollande asks PM Manuel Valls to form new government
- Decision comes after Economy and Education ministers speak out against policies
- Three ministers refuse to join new government
- New government to be announced on Tuesday
- Hollande's government is in disarray, says former PM François Fillon
18:30 - Thanks for following the live blog throughout the day. You can take a look back at what happened plus read reaction to what happened. We'll be back tomorrow when a new government is expected to be named.
18:00 - "There'll be no dissolution"
More voices adding to those who don't think Hollande even think about dissolving parliament, just yet.
"A dissolution would mean a return to power of the right and a historic defeat for the socialists," Professor of French politics Philippe Marliere tells The Local. All eyes he says will be on what Montebourg does now and whether he seeks to spread the rebellion.
"We've never seen this size of rebellion before. We have had MPs abstaining before but nothing like this. Montebourg and Hamon will not keep silent and we will probably see an increase in the intensity of the rebellion, but I don't think we will see a change in policy by Hollande," Marliere says.
"Valls will fill the cabinet with people loyal to himself," he said.
Marliere says however that no one in France really sees Hollande getting elected again in 2017.
17:49 - What do the polls say?
Naturally after an action packed day that saw the government resign and three ministers refuse to join the new government, there has natually been a shift in the opinion polls. To sum it up and it's probably not that surprising but Valls's popularity has pludged, Hollande's has hit a new low and Sarkozy's has gone up.
So Sarkozy, didn't even need to get out of bed of today and he appears in a better position to run for the presidency in 2017.
17:45 - Stock exchange edges up
Take from this what you will, but on the day France's economy minister quit the Paris stock exchange known as La Bourse finished edges up by 2.1 percent.
17:18 - Three ministers walk away
With Montebourg going, three ministers have now walked away from the new cabinet that will be announced on Tuesday. Montebourg (Economy), Hamon (Education) and Filippetti (Culture) have all refused to figure in the new government. All three were unlikely to get a post anyway given they are three of the main figures in the rebellion against the government.
Montebourg says he will "return to work among the french people" and that he never had the slightest fear about defending his convictions".
17:02 - Montebourg attacks austerity on his way out of the door:
"There is another path for Europe and for France," says Montebourg.
“The austerity policies of tax hikes and reductions in public spending decided by the government are today the cause of the useless prolongation and the aggravation of the economic crisis, and the unnecessary suffering of Europe’s citizens," Montebourg said.
"The world is begging us to halt the absurd austerity policies which continue to push the eurozone into a recession and soon into deflation."
Arnaud Montebourg whose outspoken criticism of Hollande's economic policies has just said he won't be part of the new government. Although the idea that Manuel Valls would have included him seemed inconceivable. Montebourg took another swipe at the government's economic policies in favour of auserity and cuts.
16:27 - Valls and Montebourg in happier times
16:04: - "It was pandemonium. Hollande was right to act" Socialist Party senator tells The Local
Socialist Party senator Richard Yung admitted on Monday morale in his party was at an all-time low and that he couldn't understand Economy Minister Arnaud Montebourg speaking out against the government's own economic policies.
"I think Hollande did the right thing, although it was probably more the strong hand of Valls that led to the resignation. It had become pandemonium with all the ministers speaking their own views. Either these ministers quit or they would be sacked and in the end it was the second option," said Yung, who represents French citizensliving abroad.
"Montebourg went too far. He crossed the line. You can say certain things but you can't give the impression you are outside the government, especially when you are the minister for the economy. People will look at this and think its balmy. And we don't understand it either.
"Morale in the party was already low. It's not easy for us when we are meeting constituents. There is unhappiness but Hollande and Valls are doing the right thing by trying to reduce the deficit. Perhaps more could be done to improve investment."
"Dissolution not an option"
Yung does not not believe however that Hollande will be forced to dissolve parliament due to a lack of a majority.
"The government has a majority in the Assembly (lower house). A few Socialist MPs have abstained in the past, but they haven't gone further. I don't think we will see parliament dissolved before the the next elections," he said.
15:26: Another minister bites the dust
One person who won't be in the new government is Culture Minister Aurelie Filippetti. She has written an open letter to Valls and Hollande telling them she is not interested in a position in the new government. Filippetti had been expected to be cast aside anyway, given that she was more aligned with the rebel Montebourg.
Hollande is running out of options. Although he won't be calling his old foe Nicolas Sarkozy to join the government, that's for sure.
15:02 - Soaked Hollande mocked on Twitter for his own "#icebucketchallenge"
This is story from AFP:
Twitter users mocked France's president Monday after he was drenched by rain while making a speech commemorating French resistance on the day the government collapsed, drawing gleeful comparisons
with the Ice Bucket Challenge.
The images of Francois Hollande delivering his pre-arranged comments under a downpour, his glasses covered in droplets and raincoat soaked, came at a bad time for a president who had just ordered his prime minister to reshuffle the deeply unpopular government for the second time in five months.
"#IceBucketChallenge" one Twitter user posted next to a photo of a soggy Hollande, referring to the social media sensation which sees public figures nominate others to be doused in freezing water, to raise awareness of neurodegenerative disease ALS.
"Francois Hollande's Ice Bucket that lasts 10 minutes is amazing," @Batistuta_Binet joked.
"No one nominated him but he takes up the challenge anyway," @arnaudpicpic added.
The surprise cabinet reshuffle follows a high-profile show of insubordination by firebrand Economy Minister Arnaud Montebourg and Education Minister Benoit Hamon that has highlighted deep divisions in the ruling Socialist party.
"Hollande won't have failed on everything during his five-year term, he won the Ice Bucket Challenge," @NRondepierre said, posting a picture of a smiling, drenched Hollande with the caption: "I nominate Arnaud Montebourg, Benoit Hamon and (Justice Minister) Christiane Taubira."
14:46 - Here's a selection of tweets from those following the political crisis in France:
Hollande and his government becoming true French farce.— fidelma cook (@fidelmacook) August 25, 2014
Hollande finally forced to confront Left in his own party, who interestingly and dangerously blame France's economic probs on Germany— Gideon Rachman (@gideonrachman) August 25, 2014
14:40 - Here's some reaction from the public in Paris to the fact they will get their third government in six months.
13:50 - "This shows the disarray of the Hollande"
Former Prime Minister under Sarkozy, François Fillon, who is expected to run for the presidency in 2017, has laid into Hollande today.
In a statement, the former prime minister said that "the government's resignation shows the disarray in which the president finds himself, as a result of his inaction".
According to Fillon Hollande "tried to maneuver between the irresponsible left which wants to add more and more public spending and ignoring the need to restore public finances and a tendency towards passivity that seems natural for Hollande, hoping for some miraculous growth.
"This stance has been very costly for France, which has lost much of its economic strength and its ability to create jobs. "
13:32 - "Don't overestimate the impact on public opinion"
More reaction on what the resignation of the government means. Frederic Dabi, deputy head of polling firm IFOP, tells AFP the reshuffle risked further weakening Hollande and restricting his support within the party.
"But I wouldn't overestimate the impact on public opinion," he said.
"We have a government and president that are historically unpopular, and what will make them popular or more unpopular isn't what happens in the government in terms of people but policies being implemented and a lack of results."
13:21 - Valls is meeting individually with the 16 ministers of his government on Monday afternoon and is also expected to chat with the head lawmaker in the National Assembly at 5pm.
13:05 - Montebourg is no stranger to controversy, calling an American industrialist an extremist and accusing German Chancellor Angela Merkel of "Bismarck-style" policies.
12:36 - Here's some reaction to Montebourg from the head of French bosses union MEDEF.
Reacting to the government collapse, the vice-president of the MEDEF business association said Montebourg was "in the wrong era" and wanted to return to "1990s policies" by rolling back austerity and building up France's budget deficit.
12:31 - More pressure has been put on Germany on Tuesday to help pull the eurozone out of crisis, this time from IMF chief Christine Lagarde. After Hollande himself asked Merkel to do more to boost growth Lagarde said on Monday: "What I think is very important for Germany is to participate in the recovery movement in a very intense way. It has the means to do so."
Describing the European economic recovery as "labourious", the head of the International Monetary Fund stressed that the continent's economic powerhouse had "room for manoeuvre", as seen in recent wage negotiations.
"That leeway has been disclosed in the salary negotiations between the unions and the employers' organisations," she said, adding that "hopefully that movement will be amplified and will help propel the European recovery."
Part of her remarks may be interpreted by personalities on the left of French politics as going in the same direction as criticism of French, German and European Union austerity policies by
Montebourg at the weekend.
12:21 - "Disintegration of Hollande's policies"
One person who will be enjoying all the turmoil within the Socialist Party today is Marine Le Pen, head of the far-right National Front party.
For Le Pen, the only viable option open to Hollande is to dissolve parliament and hold elections, which her party would expect to perform well in, given their strong showing in the local and European elections earlier this year.
“It’s the continuation of the disintegration of the policy of François Hollande,” Le Pen told Le Figaro. “We are close, closer than ever, to the dissolution that we have been calling for weeks.”
For Le Pen the resignation of the cabinet is “the last sequence in the collapse of the government, the presidency and these policies”.
The question is not whether Hollande will finish the term, but with what majority and whether it will be a socialist one.
“There is only one option open to François Hollande, the dissolution of the National Assembly.”
12:04 - "Hollande has shown leadership for once". We took to the streets this morning to get some reaction to the crisis from French people in Paris.
Karine Bellier, HR consultant, 41, said: "Changing the government is a good idea to keep a hold on it, to be able to implement economic policy without splits within the government. What Arnaud Montebourg did was out of line. For the first time Hollande has shown some signs of authority and leadership."
Jean Talbot, RATP agent, 47, said: "The government is doing its best, but I believe they won’t be able to change anything, whatever they do. We are in the middle of a crisis, and no politicians can really change that, whether on the left or on the right of the political spectrum.
Michel Torralba, computer engineer, 35, said: "I am, like most French people, sceptical with the political orientations of the government. When we look at the economic results, we don’t seem to be going in the right direction. The country is hard to reform, we all know that, so they don’t have an easy task.
11:59 - What about Angela Merkel? The German chancellor is not the most popular among Socialist Party stalwarts in France, due to her insistence that Paris must cut its deficit and reluctance to allow a change of course in the eurozone away from a policy of austerity and towards one of growth. Merkel was in Spain on Monday but refused to be drawn into commenting on the political crisis in France.
Merkel wished the French government all the best with its 'brave' reform programme but refused to comment on the decision of the cabinet to resign, saying it was an internal issue, reports say.
11:46 - "France is ridiculous" - Former UMP Minister Eric Woerth didn't hold back on Monday saying the resignation of the government meant that "France was ridiculous". Woerth suggested all that needed to be done was to ditch the two rogue ministers Montebourg and Hamon and said the situation made him "want to cry more than laugh".
11:36 - Taubira and Filippetti to go too?: Speculation now surrounds who will be in the new government. It will be Hollande's third government in just over two years in power. Is there anyone left for him to turn to? Rumours on Monday say Justice Minister Christiane Taubira and Culture Minister Aurelie Filippetti will also be for the chop. The pair appeared to show support for Montebourg after he spoke out on Sunday.
11:27 - More from political analyst Bruno Cautrés: "This is a real crisis, because this indicates there's no real majority within the government when it comes to economic policy," Cautrés tells The Local. "When I heard Montebourg speak out I was amazed by what he said.
"We all knew he was looking for a way out of the government so he could become a kind of leader for those Socialists opposed to the line of Manuel Valls. But it's surprising we have had resignation of the whole government. This could have been sorted out with a minor reshuffle.
"The question is can Hollande get a majority in the Assembly to get his economic policies through parliament. If there is a dissolution it would mean new elections which will result in a UMP (centre-right) majority."
11:21 - Here's a tweet of the official announcement from the presidential office on Monday morning, that Hollande had asked PM Valls to form a new government. The decision was apparently taken after a one-hour meeting between the pair at around 8am.
Manuel VALLS a présenté au Président de la République la démission de son Gouvernement pic.twitter.com/5kijTGCO06— Élysée (@Elysee) August 25, 2014
11:13 - Here are the two rebels who seem to have precipitated the latest crisis in François Hollande's government. On the left is Montebourg, holding a rose, and on the right is Benoit Hamon, the (probably) former education minister. Their attack was coordinated say some political analysts.
11:04 - A little context is needed after today's shock development. France is changing governments at a time when its economy is in a dire situation and unemployment is at an all-time high. Here's how AFP sum up the situation.
"The latest reshuffle comes at a time when France is mired in stubbornly slow economic recovery, with high unemployment.
The central bank warned this month that Hollande had no hope of reaching his target of 1.0 percent growth for 2014.
The French economy has been stagnant for the past six months and the government was forced to halve its growth forecast to 0.5 percent for this year.
Both Hollande and Valls say the answer is their so-called Responsibility Pact that offers businesses tax breaks of some €40 billion ($55 billion) in exchange for a pledge by companies to create 500,000 jobs over three years.
Hollande plans to finance this with €50 billion in spending cuts, and the plan has angered those on the left of the party - including Montebourg - who argue that the focus should be on cutting taxes to boost consumer's spending power."
11:00 - Montebourg has history:
(Montebourg had a famous slanging match with American CEO Maurice Taylor)
The 51-year-old left-wing minister is no stranger to controversy, having made headlines in the past for his outspoken criticism of ally Germany, which he has blamed for factory closures in France.
He was promoted to his current position in April in a government shake-up after the Socialist party suffered a drubbing at local elections, and has had to cosy up to finance minister Michel Sapin who supports the very austerity measures that Montebourg disagrees with.
As industrial renewal minister before his promotion, he had grabbed headlines by labelling the head of tyre giant Titan Maurice Taylor (see photo) an "extremist" after the CEO criticized the French workforce as lazy.
He also became embroiled in a very public fight with steelmaker ArcelorMittal over the closure of a plant.
10:55 - So what will Hollande do now to make sure his party has a majority in the National Assembly? French political analyst Bruno Cautrés says he won't going down the route of "co-habitation" by bringing in figures from the centre-right UMP party into his government. However Alexis Corbiere from the Parti de Gauche says the President will at least have to ally himself with people on the right, because he just won't have a majority in parliament.
A moins de s'allier avec des secteurs de la droite, la politique de MM Valls et Hollande n'a pas de majorité à l'Assemblée— Corbiere Alexis (@alexiscorbiere) August 25, 2014
10:49 - What led President François Hollande to ask Valls to change the government? Reports in French newspaper Le Parisien say that once Montebourg spoke out against the government, PM Valls went to Hollande with an ultimatum: "It's him or me. If you refuse, I will go." Hollande went with Valls it seems, who he brought in to bring a bit of authority to the government after his predecessor Jean-Marc Ayrault was criticized for being too soft.
10:43 - Arnaud Montebourg, the man, who appears to have caused the latest rift in the government will make a speech at 4pm. French political analyst Bruno Cautrés tells The Local Montebourg's attack was planned so he could line himself up as the leader of the so-called "frondeurs" (left-wing socialist rebels).
10:30 - Is a dissolution of the National Assembly possible? There have been several calls on Monday for Hollande to dissolve the National Assembly and hold new elections. Political analyst Bruno Cautrés from Sciences Po tells The Local the possibility of a dissolution was not credible a few weeks ago but now everything has changed. "We don't know now if François Hollande's government will have a majority in parliament, because the majority was already narrow. The have lost the Greens and without the"frondeurs" (rebels) it might not be possible for the Socialists to get a majority in parliament to get their economic policies through."
10:21 - Here's more from UMP deputy Bruno Le Maire, speaking before Hollande's decision to ask Valls to form a new government. "If Arnault Montebourg and Benoit Hamon had any dignity they would quit. If Manuel Valls and François Hollande had any authority, they would fire them," centre-right UMP party stalwart Bruno Le Maire told Le Monde. "The problem is that never in the Fifth Republic have we had so little dignity and so little authority at the head of the state."
10:14 - Some Socialist Party deputies on the left of the party have criticized the move by Hollande insisting it was too authoritarian.
"It was an act of authority. Authority is necessary but this line is disastrous. Hollande is like a naked king, by excluding this element in the government"," said deputy Marie-Noelle Lienemann.
10:10 - The reaction continues, with former centre-right mayoral candidate Nathalie Koscisuko-Morizet tweeting that "Hollande, already disowned by public opinion, is on his way to losing his majority in the National Assembly."
#crisederegime: Le Président Hollande, déjà désavoué par l'opinion, est en passe de ne plus avoir de majorité à l'Assemblée.— N. Kosciusko-Morizet (@nk_m) August 25, 2014
10:00 - Reaction coming in from across the political spectrum in France. Naturally the right have been the quickest to express their opinion on the disarray of the socialist government. Deputy Bruno Le Maire described "a state of civil war" within the party and Socialist deputy Jean Louis Gagnaire said the new administration would be a "last-chance government", adding that if it didn't work, it would be the right "or extreme right" in power in France.
09:55 - Valls's government was only in place for five months. The previous one, under his predecessor Jean-Marc Ayrault, was dismantled in March after the disastrous performance for the Socialist Party in France's local elections. We can expect Valls to name a few of his supporters in key positions, after the rebellion was led by those on the left of the party.
09:51 - New government will likely be named on Tuesday. We can expect Montebourg and Hamon, the two ministers who criticized Hollande, to be out.
09:47 - Hollande knew "la rentrée" would be difficult but not this difficult. Having to form a new government in his first full week back was not what he had in mind.
09:45 - The president ordered Prime Minister Manuel Valls to form a new cabinet "consistent with the direction he has set for the country," the presidency said in a statement. It did not give any reasons, but the move comes after Economy Minister Arnaud Montebourg spent his weekend bad-mouthing the country's economic direction and ally Germany in a much-criticized show of insubordination.
09:40 - President François Hollande has asked his prime minister Manuel Valls to form a new government on Monday. It comes after an outspoken attack on the government's economic policies at the weekend by two heavyweight ministers.
BACKGROUND: Hollande and his prime minister were under pressure to deal with an apparent rebellion against the government’s chosen economic path after two heavyweight ministers united to call for a change.
The unexpected broadside, described as "unprecedented" by one French newspaper, came from Education Minister Benoit Hamon and notably the Economy Minister Arnaud Montebourg.
In separate interviews they criticized the government’s obsession with trying to reduce deficits instead of pursing policies to encourage growth.
“The priority must be exiting crisis and the dogmatic reduction of deficits should come second," Montebourg told Le Monde.
Just days after Hollande and his PM Manuel Valls insisted the government would not veer from its course of budget cuts Montebourg called for a “change in our political choices" because "we need to make alternatives."
Montebourg said forcibly reducing deficits was “economic madness” because it would push up unemployment, as well as being a political disaster because it would push Europeans into the arms of extremist parties, who want to destroy Europe.
Montebourg also attacked Germany saying Paris would no longer “be pushed around” by Berlin.
As expected the open attack sent tremors through the government with the Prime Minister’s office saying "a line had been crossed" and several political analysts saying Valls's authority had been undermined.
On Monday Montebourg said he had "no regrets" over speaking out and tried to play down the row. However reports said he had been summoned to meet the prime minister in the evening.
The minister insisted however he was not considering resigning from his post as some French Socialist deputies have called for.
There was speculation on Monday that the split between Hollande, Valls and their ministers runs much deeper with others in the government appearing to align themselves with the rebels.
Rather than condemning Montebourg’s words the Justice Minister Christiane Taubira reportedly sent a message to the two rebels saying "bravo", for speaking out, and Culture Minister Aurelie Filippetti also tweeted her greetings to the two ministers in a veiled show of support.
Reacting to Montebourg's interview on Saturday Hollande, who recently called on Berlin to do more to boost growth said: "I want us to be able to convince our European partners to make growth the priority. Anyone is welcome to defend this idea and it is the position of the whole government."
Hollande is under more pressure than ever to get the economy moving after recent figures revealed it had stagnated for the second quarter of 2014.
Last week he unveiled an array of measures aimed at boosting the spending power of the country's most hard-up.