France’s Greens broke away from President François Hollande’s coalition on Tuesday after the president appointed the relatively centrist interior minister Manuel Valls as prime minister.

Valls replaces Jean-Marc Ayrault after the Socialists were defeated in local elections on Sunday. The party lost more than 150 big towns to the right and the far right.

Demands

“The ecologists will back the government without fail when it acts for progress and ecology, but it will oppose it whenever ecology is not taken into account,” the party, which has seventeen seats in the National Assembly, said in a statement.

Specifically, the Greens were adamant about maintaining a ban on shale gas exploration and hoped to reduce France’s dependence on nuclear energy, which provides around 75 percent of its electricity.

Business-friendly

Valls’ new government will still have a majority without the Greens.

The logic behind his appointment, argues The Economist, is that “Hollande wants to press ahead with a more business-friendly economic policy” that he announced earlier this year “in order to revive France’s weak economy.”

This includes €10 billion of new payroll tax cuts for firms, as part of a “responsibility pact” designed to encourage job creation. But, with France under surveillance from the European Commission, it also involves finding a hefty €50 billion of budget savings during 2015-2017.

“This will require tough, unpopular decisions,” the British newspaper points out — which so far Hollande has seldom made.

For example, the president recognizes that France’s high labor costs account in part for its 10.9 percent unemployment rate — the same as the European average but higher than it has been in fourteen years and more than twice the rate in neighboring Germany. Yet he has shied away from proposals to reduce it, which could include lowering social contributions from employers or making it easier to fire workers.

New vision

The president’s allies have nevertheless hailed his new “social democratic” vision and Valls’ appointment should be seen in this light.

Although he has no experience running economic policy, he did carve out a reputation as a “social liberal,” proposing to scrap France’s 35-hour work week and raising the retirement age.

This not only puts him at odds with the Greens but the “old left” in the Socialist Party as well. Open Europe, a Euroskeptic think tank, warns, “Rebellions in parliament on future economic reforms cannot be ruled out.”

Test

Valls’ first test will come later this month, when he unveils France’s budget plans for the next two years.

The country missed its deficit target of 4.1 percent in 2013, ending the year with a 4.3 percent shortfall instead. If it is to bring its deficit in line with the European treaty limit of 3 percent without raising more taxes — which have made Hollande’s administration so unpopular — the new prime minister can only cut spending and promote policies that will boost growth.

That will undoubtedly upset the far left, which believes such reforms would undermine the French social model.