By Ingrid Melander and Jean-Baptiste Vey
PARIS (Reuters) - By making ex-banker Emmanuel Macron his new Economy Minister, French President Francois Hollande will be hoping to boost his pro-reform agenda and end two years of infighting on his economics team.
Macron, 36, Hollande's top economic adviser until a few weeks ago, has the business community's ear, although his appointment will not ease the cabinet's relations with rebel lawmakers who want an economic policy U-turn.
The contrast could not be starker between Macron, who helped draw up Hollande's pro-business agenda, and the man he will replace, firebrand, anti-austerity advocate Arnaud Montebourg, who was ousted on Monday for slamming the government's economic policy.
Macron, a former partner at Rothschild bank, will work alongside Finance Minister Michel Sapin, 62, a close Hollande ally, to try and reinvigorate the euro zone's second-biggest economy.
The stagnant economy has forced the government to abandon its growth and fiscal targets for this year, while unemployment is at a record high of over 3 million.
Macron will be charged with carrying out Hollande's main economic goals of cutting labour costs, slashing red tape and opening up closed professions such as notaries and pharmacists, not an easy task as the government has a shaky majority with which to push through reforms.
Still, while French CEOs often complained about Montebourg's protectionist policies, Macron won wide respect in the business community within months of becoming Hollande's advisor two years ago.
"Emmanuel Macron is our relay, our entry point to the president," France Telecom chief executive Stephane Richard told Challenges magazine in September 2012. "I have seen him at Rothschild, he will reassure everybody."
Macron studied in France's top elite schools, including the ENA civil service school, which Hollande and many top French officials have attended.
"Macron has proven his worth in the Elysee," an advisor to Hollande said, referring to the president's official residence. "He knows the business world very well ... and most important of all, the president fully trusts him."
Tensions between ministries over France's economic policy are a long-standing tradition, but had never been as strong as since Hollande became president in May 2012 and Montebourg took the industry and then the economy portfolio.
The new team of Sapin and Macron should "increase the pace of reforms in the strict line of what has been decided at the Elysee," ING analyst Julien Manceaux said, referring to public spending cuts and tax cuts for businesses to boost the economy.
"The new economy minister is certainly a confirmation of Mr Hollande's intentions, and a very good signal to France's European partners," Manceaux said.
The first reaction from one of the 40 or so Socialist lawmakers who are opposed to Hollande's pro-business policies was far less enthusiastic. "Macron the liberal to replace Montebourg: a laughable provocation," Laurent Baumel said on his Twitter page.
Macron had left the Elysee a few weeks ago, saying he wanted to work on personal projects. He was replaced as Hollande's top economic advisor by Bank of America Merrill Lynch's chief European economist, Laurence Boone, who will remain in place.
Sapin, who became friends with Hollande in 1977 when they shared a barracks during military service, has been Finance Minister since April.
(Additional reporting by Julien Ponthus; Writing by Ingrid Melander; Editing by Susan Fenton)