Doug Stanglin

USA TODAY

French President Francois Hollande named Interior Minister Manuel Valls as new prime minister Monday after the ruling Socialist party suffered bruising losses to conservatives and far-right National Front in local elections.

In a prerecorded televised speech, Hollande said Valls, who is consistently voted as France's most popular politicians, would lead a "combative government."

Hollande, whose own unpopularity has held dragged down the Socialists, acknowledged that "it's time to start a new stage."

Valls, 51, who comes from the right-wing of the Socialist party, replaces Prime Minister Jean-Marc-Marc Ayrault, who resigned Monday.

"This evening is a moment of truth. There is no getting away from it: this vote is a defeat for the government ... and I take my part of the blame," Ayrault said on national television late Sunday.

Despite Valls' broad appeal, he is treated with some suspicion among the left-wing of the Socailist party because of his relative popularity with French conservatives.

The French public have been particularly unhappy with the Socialists over the country's 10% unemployment and a sluggish economy that grew at only 0.3% last year.

The government signaled, however, that it will stick with its economic reforms and spending cuts as well as a payroll tax cut designed to create jobs.

Hollande had little choice but to fire the entire government after the brutal second round of municipal elections on Sunday. The Socialists lost more than 150 towns and cities with a population of more than 9,000 people.

The center-right UMP made the biggest gains, while Marine Le Pen's far-right National Front party won 11 towns and the 7th district of Marseille, France's second largest city,

The only bright spot for the Socialists was election of Anne Hidalgo as the first female mayor of Paris.

The Finance Ministry is likely to face the biggest shake up over criticism that it has scared away investors with high and complex taxes and has struggled to find solutions to chronic low growth and growing joblessness.

While the NF made impressive gains -- a record for the party -- it fell short of even a broader sweep that some Socialists had feared.

The NF's showing follows an attempt to soften its xenophobic image and tap into widespread discontent with mainstream politics.

Contributing: Associated Press