April 2 (Bloomberg) -- Michel Sapin was named French finance minister and Segolene Royal was put in charge of environmental policy, roles they held under France’s last Socialist president 20 years ago.
Royal, 60, and Sapin, 61, were appointed today by President Francois Hollande as part of a cabinet shake-up after his party was trounced in municipal elections. When Francois Mitterrand recruited them to his cabinet in April 1992, Bill Clinton was campaigning for the White House and grunge band Nirvana released the single “Sounds Like Teen Spirit.”
“This is a team that has hardly been renewed,” said Camille Bedin, a vice president in the opposition UMP party. With Sapin and Royal returning to their ministries of 1992, “it’s hardly any change at all.”
The new cabinet was named in response to an unprecedented defeat for the Socialist Party in the municipal elections on March 23 and March 30 that voters used as a referendum on Hollande’s 22 months in office. Prime Minister Manuel Valls, 51, who was sworn in yesterday, and his ministers face the delicate task of steering through deficit cutting at a pace that is acceptable both for voters and the European Commission.
The French economy barely grew in the past two years and jobless claims are at a record of more than 3 million. Hollande’s popularity remains near record lows.
“Hollande’s majority is fragmented and the political and economic constraints are daunting,” said Gilles Moec, chief European economist at Deutsche Bank in London. While the new government will deliver the planned payroll tax cut and reduce the deficit, “room for maneuver to push for further-reaching reforms” is “actually quite limited.”
Hollande has struggled to rekindle France’s sluggish economy. In January, he unveiled a “Responsibility Pact,” with cuts of 30 billion euros ($40 billion) from business charges, and promised to squeeze government spending to cap unemployment.
Moec said that the policy outlook was confused by expanding the portfolio of Industry Minister Arnaud Montebourg to include economic policy. Montebourg, 51, has championed the state’s role in directing private enterprise during his two years in office.
Royal, the Socialist Party’s presidential candidate in 2007, Hollande’s former partner and the mother of his four children, will have to manage the president’s plans to wean France off its dependence on nuclear power toward renewables. France gets about 75 percent of its electricity from nuclear energy, the highest proportion in the world.
Sapin, as labor minister since Hollande’s election in May 2012, has guided unions through a loosening of French labor laws and changes to the unemployment insurance system.
In a January interview with Lui, a men’s magazine, the in-coming finance minister said Hollande’s policies toward markets have “matured.”
“The crazy financial sector loves debt,” Sapin told the glossy that always puts a female model on its cover. “So fighting indebtedness is fighting the crazy finance sector.”
Sapin replaces Pierre Moscovici, who leaves the government.
In 2012, Sapin championed a plan for excessive European debt to be pooled into a common fund. His proposal for a so-called European Redemption Fund was originally developed by Chancellor Angela Merkel’s council of economic advisers and backed by German opposition parties. Merkel has rejected the proposal.
German Finance Minister Wolfgang Schaeuble told reporters in Athens he knows his new French counterpart “a little.”
“I’m very sure that I’ll work together well” with him, Schaeuble said.
The total number of ministers in the cabinet unveiled today shrank to 16 from 20.
Bernard Cazeneuve was named interior minister, while Laurent Fabius was kept at the foreign ministry. Stephane Le Foll remains agriculture minister, while adding the job of government spokesman. Defense Minister Jean-Yves Le Drian, who managed military interventions in Mali and the Central African Republic, also keeps his post.
The new configuration includes nine men and seven women.
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