French budget minister resigns over tax-fraud probe

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.

Cahuzac 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.