France's entire Socialist government was dissolved yesterday as . President Francois Hollande desperately fought to assert authority in . the face of economic crisis. The upheaval comes as a key minister . launched a rebellion by claiming the president is leading France to . ‘catastrophe’ by seeking to make cuts ‘on German orders’. Left-wing . economy minister Arnaud Montebourg defied Mr Hollande’s authority by . publicly urging him to discard austerity and break with what he . described as deficit-cutting measures imposed on the eurozone by ‘the . most extreme orthodoxy of the German Right’. Scroll down for video . French President Francois Hollande (left) and French Prime Minister Manuel Valls shaking hands at the Elysee presidential palace in Paris after a weekly cabinet meeting. Hollande asked Valls to form a new government, which will be presented on Tuesday . Earlier this month . German president Angela Merkel had rejected calls from Mr Hollande to . soften eurozone deficit targets that France had failed to meet. As . his party was plunged into civil war, Mr Hollande yesterday called on . Manuel Valls, his prime minister, to form a new cabinet ‘consistent with . the direction he has set for the country’. The head of state’s approval . rating has plunged to 17 per cent – by far the lowest in the history of . modern France. It follows a disastrous two years in power, which . has seen the French economy stagnant for the past six months, and . unemployment is running at more than 10 per cent. Mr Valls’s . government has been in power for only five months. The value of the euro against the  US dollar slumped yesterday following the upheaval in  France. As Francois Hollande dissolved his government, the euro fell to 1.3185 against the dollar, its lowest level since September 2013. In London, the stock exchange was closed for the Bank Holiday. When it closed on Friday the pound was at 1.25 against the euro. France, dubbed the ‘sick man of Europe’, has seen its economy grind to a halt, registering two consecutive quarters of no growth. The value of the single currency has also been eroded by weak confidence that the eurozone economies can eke out growth. Figures last week showed there was zero growth for the 18-country bloc in the three months to the  end of June. Senior Bank of England official David Miles said Europe’s economy was ‘dead in the water’. The last one, under . Jean-Marc Ayrault, was dissolved in March after the disastrous . performance of the Socialist Party in local elections. Two ministers, Mr . Montebourg and education secretary Benoit Hamon, have publicly . criticised the direction in which Mr Hollande’s hapless administration . is heading. Mr Montebourg, 51, said forcibly slashing deficits was . ‘economic madness’. He also attacked Germany, saying it should not be . allowed to ‘push around’ his country. He told Le Monde newspaper: . ‘The priority must be the existing crisis and the dogmatic reduction of . deficits should come second.’ Mr Hamon was similarly scathing towards Mr Hollande, effectively saying he supported the rebellion launched by Mr Montebourg. Justice . minister Christiane Taubira meanwhile sent a message to the two rebels . saying ‘bravo’ for speaking out. Culture minister Aurelie Filippetti . also tweeted her greetings to the two ministers in a veiled show of . support – which forced her resignation before tomorrow’s reshuffle. Spanish PM Mariano Rajoy (right) and German chancellor Angela Merkel (left) walk the last part of the Way of Saint James in Santiago de Compostela, Galicia, northwestern Spain on Sunday as they talk about European Affairs. French economic minister Arnaud Montebourg attacked Germany for 'pushing France around' New start: Hollande's office said in a statement a new government would be formed by Valls (right) on Tuesday in line with the 'direction he (the president) has defined for our country' President Hollande has ignored two years of dissent from Mr Montebourg in the interests of holding together his divided party. But . Mr Valls is understood to have threatened to resign if Mr Hollande had . failed to act, accusing Mr Montebourg of crossing ‘a yellow line’ as he . announced the cabinet’s resignation. But the economy minister told a . news conference yesterday that he had to speak out to try to avert the . European Union’s ‘descent into hell’. He said: ‘I informed the prime . minister... that if he deemed my convictions counter to the direction of . the government he leads, then in that case I thought it necessary for . me to be let go.’ Both Mr Hollande and Mr Valls believe the key to . success is their so-called Responsibility Pact, which offers businesses . tax breaks in exchange for creating jobs. But the Left wing of the ruling Socialist Party is furious over this shift to centrist economic policies.The . crisis comes on the day Paris was meant to be focusing on the 70th . anniversary of its liberation from Nazi rule during the Second World . War. As his political fortunes plummeted, Mr Hollande cut a sorry . figure as he made an open air speech in pouring rain on the Ile de Sein, . off the coast of Brittany. Soaked, and with his glasses steamed up, . he read from a prepared script about France’s wartime history, without . once referring to his government’s dissolution . Why has Frances’ Socialist Prime Minister resigned along with his entire government? Senior cabinet members, including Economy Minister Arnaud Montebourg, are in open revolt at the austerity drive imposed on France by Europe, and sanctioned by President Francois Hollande. They say it is has stifled economic growth, and caused unemployment to rocket to above 3.3 million. They also believe that economic woes are leading to the success of extremist parties, such as the National Front, who won 26% of the popular vote in European elections in May. What happens next? A new government will be formally appointed by Mr Valls, in consultation with Mr Hollande, on Tuesday. It is likely to be a ‘compromise’ government, aimed at uniting left-wingers with more centrist cabinet members, while allowing the Prime Minister and President to continue with their economic policies. What is wrong with France's economy? Critics argue that just over two years of Socialist administration has plunged it into chaos. Mr Hollande came to power as a tax-and-spend left winger who admitted to disliking the rich. A top rate of income tax of 75% was among measures which caused wealth creators to flee the country, along with wealthy celebrities. Mr Hollande has adopted a more moderate stance in recent months, but there has been zero economic growth this year, as unemployment rises along with the cost of living. Will a new government fix it? Commentators fear that a new Socialist government – one which will amount to the third this year alone – will simply lead to more failure. Mr Hollande is a notoriously indecisive leader who does everything possible to keep everybody happy, at the expense of getting anything positive done. Mr Montebourg is likely to lead further challenges to the authority of Mr Hollande and Mr Valls, along with numerous allies on the left of the Socialist Party. A party at war is unlikely to sort out France’s chronic economic problems. Does the French crisis affect other countries in Europe? Yes – France’s decline within the EU project is having huge repercussions across the Eurozone, not least of all on near-neighbours such as the UK. Global economies are all interlinked, with economic experts frequently warning that a ‘sick man’ France will pull all others down with it. This could mean disaster for the EU.
PM Manuel Valls offered up his Socialist government's resignation Monday .
He said his economy minister had crossed a line by criticising policies .
Hollande's office said a new government would be formed on Tuesday .
He remains the most unpopular president in more than half a century .
France's entire Socialist government was dissolved yesterday as . President Francois Hollande desperately fought to assert authority in . the face of economic crisis. The upheaval comes as a key minister . launched a rebellion by claiming the president is leading France to . ‘catastrophe’ by seeking to make cuts ‘on German orders’. Left-wing . economy minister Arnaud Montebourg defied Mr Hollande’s authority by . publicly urging him to discard austerity and break with what he . described as deficit-cutting measures imposed on the eurozone by ‘the . most extreme orthodoxy of the German Right’. Scroll down for video . French President Francois Hollande (left) and French Prime Minister Manuel Valls shaking hands at the Elysee presidential palace in Paris after a weekly cabinet meeting. Hollande asked Valls to form a new government, which will be presented on Tuesday . Earlier this month . German president Angela Merkel had rejected calls from Mr Hollande to . soften eurozone deficit targets that France had failed to meet. As . his party was plunged into civil war, Mr Hollande yesterday called on . Manuel Valls, his prime minister, to form a new cabinet ‘consistent with . the direction he has set for the country’. The head of state’s approval . rating has plunged to 17 per cent – by far the lowest in the history of . modern France. It follows a disastrous two years in power, which . has seen the French economy stagnant for the past six months, and . unemployment is running at more than 10 per cent. Mr Valls’s . government has been in power for only five months. The value of the euro against the  US dollar slumped yesterday following the upheaval in  France. As Francois Hollande dissolved his government, the euro fell to 1.3185 against the dollar, its lowest level since September 2013. In London, the stock exchange was closed for the Bank Holiday. When it closed on Friday the pound was at 1.25 against the euro. France, dubbed the ‘sick man of Europe’, has seen its economy grind to a halt, registering two consecutive quarters of no growth. The value of the single currency has also been eroded by weak confidence that the eurozone economies can eke out growth. Figures last week showed there was zero growth for the 18-country bloc in the three months to the  end of June. Senior Bank of England official David Miles said Europe’s economy was ‘dead in the water’. The last one, under . Jean-Marc Ayrault, was dissolved in March after the disastrous . performance of the Socialist Party in local elections. Two ministers, Mr . Montebourg and education secretary Benoit Hamon, have publicly . criticised the direction in which Mr Hollande’s hapless administration . is heading. Mr Montebourg, 51, said forcibly slashing deficits was . ‘economic madness’. He also attacked Germany, saying it should not be . allowed to ‘push around’ his country. He told Le Monde newspaper: . ‘The priority must be the existing crisis and the dogmatic reduction of . deficits should come second.’ Mr Hamon was similarly scathing towards Mr Hollande, effectively saying he supported the rebellion launched by Mr Montebourg. Justice . minister Christiane Taubira meanwhile sent a message to the two rebels . saying ‘bravo’ for speaking out. Culture minister Aurelie Filippetti . also tweeted her greetings to the two ministers in a veiled show of . support – which forced her resignation before tomorrow’s reshuffle. Spanish PM Mariano Rajoy (right) and German chancellor Angela Merkel (left) walk the last part of the Way of Saint James in Santiago de Compostela, Galicia, northwestern Spain on Sunday as they talk about European Affairs. French economic minister Arnaud Montebourg attacked Germany for 'pushing France around' New start: Hollande's office said in a statement a new government would be formed by Valls (right) on Tuesday in line with the 'direction he (the president) has defined for our country' President Hollande has ignored two years of dissent from Mr Montebourg in the interests of holding together his divided party. But . Mr Valls is understood to have threatened to resign if Mr Hollande had . failed to act, accusing Mr Montebourg of crossing ‘a yellow line’ as he . announced the cabinet’s resignation. But the economy minister told a . news conference yesterday that he had to speak out to try to avert the . European Union’s ‘descent into hell’. He said: ‘I informed the prime . minister... that if he deemed my convictions counter to the direction of . the government he leads, then in that case I thought it necessary for . me to be let go.’ Both Mr Hollande and Mr Valls believe the key to . success is their so-called Responsibility Pact, which offers businesses . tax breaks in exchange for creating jobs. But the Left wing of the ruling Socialist Party is furious over this shift to centrist economic policies.The . crisis comes on the day Paris was meant to be focusing on the 70th . anniversary of its liberation from Nazi rule during the Second World . War. As his political fortunes plummeted, Mr Hollande cut a sorry . figure as he made an open air speech in pouring rain on the Ile de Sein, . off the coast of Brittany. Soaked, and with his glasses steamed up, . he read from a prepared script about France’s wartime history, without . once referring to his government’s dissolution . Why has Frances’ Socialist Prime Minister resigned along with his entire government? Senior cabinet members, including Economy Minister Arnaud Montebourg, are in open revolt at the austerity drive imposed on France by Europe, and sanctioned by President Francois Hollande. They say it is has stifled economic growth, and caused unemployment to rocket to above 3.3 million. They also believe that economic woes are leading to the success of extremist parties, such as the National Front, who won 26% of the popular vote in European elections in May. What happens next? A new government will be formally appointed by Mr Valls, in consultation with Mr Hollande, on Tuesday. It is likely to be a ‘compromise’ government, aimed at uniting left-wingers with more centrist cabinet members, while allowing the Prime Minister and President to continue with their economic policies. What is wrong with France's economy? Critics argue that just over two years of Socialist administration has plunged it into chaos. Mr Hollande came to power as a tax-and-spend left winger who admitted to disliking the rich. A top rate of income tax of 75% was among measures which caused wealth creators to flee the country, along with wealthy celebrities. Mr Hollande has adopted a more moderate stance in recent months, but there has been zero economic growth this year, as unemployment rises along with the cost of living. Will a new government fix it? Commentators fear that a new Socialist government – one which will amount to the third this year alone – will simply lead to more failure. Mr Hollande is a notoriously indecisive leader who does everything possible to keep everybody happy, at the expense of getting anything positive done. Mr Montebourg is likely to lead further challenges to the authority of Mr Hollande and Mr Valls, along with numerous allies on the left of the Socialist Party. A party at war is unlikely to sort out France’s chronic economic problems. Does the French crisis affect other countries in Europe? Yes – France’s decline within the EU project is having huge repercussions across the Eurozone, not least of all on near-neighbours such as the UK. Global economies are all interlinked, with economic experts frequently warning that a ‘sick man’ France will pull all others down with it. This could mean disaster for the EU.
orders’. Left-wing . economy minister Arnaud measures imposed on the eurozone by ‘the . most statement a new government would be formed by Valls (right) on Tuesday in line with the He said: ‘I informed the prime . minister... that