French budget minister resigns

(Financial Times) -- Jérôme Cahuzac, France's socialist budget minister, has resigned after prosecutors launched a tax fraud probe into allegations that he had an undeclared Swiss bank account.

Prosecutors began the formal investigation after police decided that a voice on a tape recording heard acknowledging as much was probably his. Mr Cahuzac, who said in a statement that he was quitting for the good of the government, insisted he was innocent of the "slanderous" allegations first published last year by Mediapart, an investigative website.

Mr Cahuzac's departure is a blow to President François Hollande who is under intense pressure from his eurozone partners to do more to rein in public spending by €60bn over the next five years.

Widely acknowledged even by his political opponents as a master of the complex budget portfolio, Mr Cahuzac charted the government's tax-heavy 2013 budget and plans for the following four years through parliament. His duties included the government's crackdown on tax evasion.

He will be replaced by Bernard Cazeneuve, the Europe minister, who will immediately have to wrestle with his fellow ministers over where the axe will fall in an unprecedented effort to cut France's big public spending bill. That task is central to meeting commitments to hitting EU deficit targets and bringing down the public debt, which has risen above 90 per cent of gross domestic product.

The public prosecutor said on Tuesday that a judicial investigation would now be opened into the case following a preliminary investigation begun in January. It said this would allow investigators to pursue their inquiries, including internationally, "in Switzerland but also in Singapore".

A key element in the allegations against Mr Cahuzac is a tape recording dating from 2000 in which a voice is heard referring to holding an account at UBS.

The prosecutor said the tape had been analysed by police technicians who had concluded that "our analysis reinforces the hypothesis that Jérôme Cahuzac was the unknown speaker".

Mediapart alleged that Mr Cahuzac held an account at UBS in Geneva until 2010, saying that he then shifted the account to Singapore.

Mr Cahuzac, who has always insisted he has never had an account in Switzerland "or anywhere else abroad", has to date been firmly backed by Mr Hollande and his fellow ministers.

© The Financial Times Limited 2013