PARIS -- French politics were thrown into disarray Monday as Prime Minister Manuel Valls said he would dissolve the government, after a divisive battle in his Cabinet over whether belt-tightening measures supported by President Francois Hollande were impeding France's stagnant economy from recovering.

The political crisis reflected a widening backlash against austerity not only in France but in Europe more broadly, as well as deepening tensions between France and Germany, which continues to advocate budget cuts as necessary to restore confidence in the eurozone.

The French media reported that Valls had threatened to resign Sunday unless Hollande ordered a shake-up of the government after his outspoken economy minister, Arnaud Montebourg, insisted that budgetary austerity had gone too far and was hobbling France and the eurozone.

"It's either him or me," Valls said to Hollande, according to the French newspaper Le Monde.

Montebourg suggested over the weekend that Hollande had overreached in pushing austerity -- including a plan to slash spending and raise taxes -- to reduce the nation's deficit, and that if the French government did not shift course, it risked losing support to populist or extremist parties.

"The priority must be exiting the crisis, and the dogmatic reduction of deficits should come after," Montebourg said in an interview published in Le Monde. In a speech over the weekend, Montebourg added that he had asked Hollande for a "major shift" in economic policy to favor growth, adding, "Promising to get the economy going again hasn't worked."

He also took direct aim at the policies of the German chancellor, Angela Merkel.

"We need to raise the tone," he said in the interview in Le Monde. "Germany is caught in a trap of austerity that it is imposing across Europe."

A new government is to be formed Tuesday, and Valls is expected to remain as prime minister. After raising dissent from within the government, it seemed likely that Montebourg would be dropped from the Cabinet.

Last week, Hollande acknowledged the problems his government faced, saying in an interview with Le Monde that austerity policies the country had been compelled to follow to meet the eurozone's budget deficit target had made it near impossible to achieve a recovery after six months of zero growth and more than a year of weak economic activity.

As a result, France will no longer try to meet a deficit reduction target this year, he said. Even so, growth is so weak in France, which has the second-largest economy in Europe after Germany, that it is unlikely to rebound anytime soon, he added.

It was the most strident repudiation yet of the policies that Merkel and the so-called troika of lenders -- the European Commission, the International Monetary Fund and the European Central Bank -- insisted countries follow at the height of the crisis, when there was a palpable danger that the 18-member euro monetary union might break up.

That threat has diminished, but requirements that even countries facing a recession slash spending and raise taxes to meet fiscal targets have shifted the European debt crisis into a new phase: one of prolonged anemic growth and high joblessness.

On Monday, Merkel was in Spain to meet with Prime Minister Mariano Rajoy, a visit aimed in part to shore up support for her austerity policies. Asked about events in France, she told reporters that she wished Hollande success with his reforms but declined to comment on French domestic politics.

Valls was initially a relatively popular prime minister, but his support has diminished as the economy has faltered. Hollande has one of the lowest popularity ratings in decades.

Information for this article was contributed by David Jolly, Maïa de la Baume and Alison Smale of The New York Times.

A Section on 08/26/2014