France’s Socialist Prime Minister and entire government quit following electoral meltdown as Hollande set to hand top job to interior minister...

Jean-Marc Ayrault admitted that a huge swing to the Right, including to the extremist National Front, was down to him and his Left-wing government.

And last night socialist President Francois Hollande – whose rule has become synonymous with a 75 per cent top rate of income tax – admitted to mistakes and said his priority was now to cut taxes.

The government’s resignation is a huge blow to the president, who was elected to a five-year term in 2012 but whose first two years in power have seen him become the most unpopular head of state in recent history.

And it is an embarrassment for Ed Miliband, who has lauded the Paris government for its economic policies and its refusal to follow George Osborne’s austerity measures.

While Britain’s economy is on the road to recovery, unemployment in France is at record levels and growth is sluggish.

In a TV address to the nation last night President Hollande spoke of a ‘moral crisis’, adding: ‘It’s legitimate after what happened to change things.’

He said boosting the economy was now the priority and added: ‘It is essential for our country to produce more, to produce better, to produce French.’

Mr Hollande also said a key objective for the new government would be pursuing the so-called ‘responsibility pact’ to lower employers’ costs in order to spur job creation.

He also pledged to lower taxes and said France would have to persuade EU partners to take into account its efforts to boost the economy when examining its commitments to Brussels.

Mr Hollande also confirmed a plan to cut 50billion euros in government spending.

On a day of high drama in Paris, Mr Ayrault said: ‘There is no getting away from it – this vote is a defeat for the government. I take my part of the blame.’

All 38 of his ministerial colleagues also quit ahead of a government reshuffle.

Mr Hollande replaced Mr Ayrault with Manuel Valls, the tough-talking interior minister – the French version of home secretary – who is fiercely anti-immigration.

The president said Mr Valls would lead a ‘combative government’.

Mr Valls, 51, who was born in Spain, caused outrage in his own party last year when he said Roma gypsies ‘did not want to integrate’ and should be deported.

He is the most popular socialist among conservatives.

He wants, for example, to rethink the 35-hour working week, a socialist initiative.

More than 150 town halls swung from the socialists to opposition parties in the weekend’s local elections.

The far-Right National Front enjoyed unprecedented success – taking control of 11 key constituencies, and up to 1,200 municipal seats.

Most gains were in areas of high unemployment and immigration.

‘This has been a huge victory for us,’ said National Front leader Marine Le Pen, who believes her party will do even better in the EU elections.

She claimed Mr Valls was a ‘dangerous’ politician with ‘no respect for public freedoms’.

The conservative UMP opposition also did well, winning towns which have been in socialist hands for decades.

The only good news for the socialists was the election of Anne Hidalgo as first woman mayor of Paris.

She pledged to turn the capital into a truly global city to rival London.