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France: Hollande’s ‘best friend’ becomes finance minister

France appoints new finance minister

Michel Sapin, one of President Hollande's closest allies, has been appointed finance minister, replacing Pierre Moscovici, who finds himself without a cabinet post following a reshuffle by new Prime Minister Manuel Valls.

The reorganization is the last part of the shake-up of Hollande's government following the Socialist Party's poor showing in municipal elections.

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For Antonio Barroso, senior vice president at Teneo Intelligence, the key words to extract from the appointment of Sapin and of Arnaud Montebourg as minister for the economy, productive recovery and digital, are continuity and compromise. Montebourg, previously minister for industrial revival, is better known for his fights against multinationals to safeguard French jobs and his campaign to boost Made in France products.

The move gives Hollande peace of mind as Sapin is one of his most trusted advisors, Barroso added.

"Sapin will basically follow the same line Moscovici did", he said. "He is one of Hollande's best friends. They did military service together."

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For Nicholas Spiro, managing director at Spiro Sovereign Strategy, "it's a lurch to the left" and "the appointment of Mr Sapin, a committed Socialist, as finance minister and Mr Montebourg, one of staunchest critics of austerity, as economy minister is a huge disappointment from a market standpoint and a very awkward political double-act to say the least."

Hollande has already attempted to overhaul France's ossified economy. In January, Hollande introduced the Responsibility Pact aimed at boosting employment by cutting labour costs. It has been seen by many as a liberal departure for the President. And the arrival of Manual Valls, described as the most right-leaning of the left, only sealed that belief.

Sapin might be leaving his role as labor minister, but the finance ministry is not completely unknown to him. He already occupied the position in 1992, under President Mitterand, but his job this time around might be a lot trickier.

Dominique Barbet, economist at BNP Paribas, highlights that while the 2014 budget has already been voted and that he will have very little effort to make in order to reach the country's deficit target of 3.6 percent, "for 2015, on the other hand, everything remains to be done."

"It's a big challenge", he underlines as "over 20 billion euros ($27.6 billion) need to be found."

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