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France reshuffle: Rearranging deckchairs on Titanic?
French President Francois Hollande is expected to reshuffle his cabinet amid growing pressure from the public after his socialist party suffered heavy losses in local elections.
The far-right National Front, led by Marine Le Pen took control of 11 towns, mainly in the south, while the around 150 towns went to the center-right main opposition UMP party, the former party of ex-President Nicolas Sarkozy.
The losses follow growing public discontent in France with the economic track record of Hollande which has seen unemployment stuck at around 10 percent. The budget deficit stood at 4.3 percent of gross domestic product in 2013.
Hollande is expected to make a televised statement on Monday, the president's ally and socialist senator Francois Rebsamen told Reuters, in which some ministers are likely to be replaced.
Prime Minister Jean-Marc Ayrault and finance minister Pierre Moscovici could be in the line of fire. Ayrault told national television on Sunday that he took "part of the blame" for the election beating.
But analysts are doubtful that a reshuffle will solve the problems facing France and Hollande's government.
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"I think it's really rearranging deckchairs on the Titanic. Until they sort the economy out, nothing else is going to fix the major reason why the French are so unhappy with the government," Rainbow Murray, associate professor at Queen Mary university of London, told CNBC in a TV interview.
'Thin' room for maneuver
Hollande is facing embarrassingly low popularity levels. In an attempt to woo businesses, the president unveiled a "responsibility pact" aimed at cutting labor costs and taxes to spur job creation.
But many believe structural reform in France is moving ahead too slowly. GDP rose by a tepid 0.3 percent last year. Analysts said that a reshuffle is unlikely to materially change Hollande's government policy as the president has little room to make concessions.
"The government could show it is receptive to voters' concerns by, for example, announcing a cut in income tax for... low income households. But on that I think it is risky for two reasons. One, the room for maneuver on the fiscal side is very thin and second, the economic impact is uncertain," Maxime Alimi, economist at AXA Investment Management, told CNBC in a TV interview.
Manuel Valls for PM?
Interior Minister Manuel Valls has been at the forefront of cabinet reshuffle speculation, tipped to be offered the role of Prime Minsiter to replace Ayrault. But Valls is unpopular with many on the left and the Greens, a key coalition partner.
The choice of candidate will be crucial for Hollande's government to remain stable, according to Howard Davies, professor of practice at Sciences Po.
"Is he prepared to appoint somebody like Manuel Valls who is much disliked by the far left and just to say, 'that's the way we are going and you can like it or lump it', which will be an important signal?" Davies told CNBC.
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"But I think if he tries to keep them all on board again and bring in Ségolène Royal to massage the left, that will be badly received and the government will continue to decline."
Ségolène Royal, Hollande's former partner and mother of his four children, has also been tipped to take up a position within the cabinet.
If Valls is asked to step in as prime minister, he will have a big career decision to make, Rainbow Murray, associate professor at Queen Mary university of London said.
"If I were Manuel Valls I wouldn't take it. He is still quite early in his career and he is probably eying up the presidency for 2022 and if he takes on the helm now in a very unpopular government, that might tarnish his credibility and destroy his career," Murray said.
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