FRENCH President Francois Hollande has fine-tuned his third government team in two years as he sought to reconcile pro-growth measures with deficit-reduction after ousting rebel ministers opposed to budgetary rigour.

He and Prime Minister Manuel Valls unveiled a new cabinet which will make its debut just a few weeks ahead of tough negotiations at home and with EU peers on a 2015 budget widely seen as breaking promises to Brussels over deficit cuts.

The reshuffle is the latest episode in a debate in Europe about how much budgets can be cut to reduce debt while the region's economies are still recovering from financial crises.

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Mr Valls handed in his government's resignation yesterday after Mr Hollande judged outspoken Economy Minister Arnaud Montebourg had gone too far by attacking his recovery plan and crucial euro zone partner Germany's "obsession" with austerity.

While Mr Montebourg's appeals for fiscal loosening aimed at boosting growth have started to gain traction in some quarters outside France, others insist trimming welfare systems and state spending are needed to make economies more competitive.

One source close to Mr Hollande said: "The president and the prime minister want to get it wrapped up quickly because the government needs to get down to work."

At stake is the slender majority of Mr Hollande's Socialists in the lower house of parliament.