Baroin had long been regarded as a natural successor to Lagarde, having worked closely with the finance ministry in his current role as budget minister, although as a man who has tended to work behind the scenes he may initially lack Lagarde’s clout on the international stage.

The 46-year-old, whose youthful air once earned him the nickname “Harry Potter,” advocated fiscal discipline and economic convergence with Germany during his 14-month stint as head of the budget ministry, and he oversaw fiscal reforms.

President Nicolas Sarkozy’s office said Valerie Pecresse, 43, a minister for higher education with a solid academic profile, would replace Baroin as both budget minister and government spokeswoman.

Baroin is taking up one of the most prominent posts in the government, yet the switch 10 months before a presidential election is unlikely to alter France’s economic and fiscal policy, which is largely guided by Sarkozy’s office.

“We are in a difficult pre-election period and budget policy is being steered by the president’s office. He’ll follow instructions,” said BNP Paribas economist Dominique Barbet.

France is battling to trim its public deficit and hold onto its coveted AAA debt rating despite a sluggish rebound from the economic crisis two years ago.

Barbet said Baroin, who has no experience on the global stage and has a weak command of English, could struggle to fill Lagarde’s shoes in pushing France’s G20 goals and in euro zone debt crisis talks, where Berlin already has the upper hand over Paris in taking decisions.

Sarkozy had been keen to promote young or centrist-leaning members of his UMP party, aides said, after recent reshuffles had brought in old-school conservatives close to former president Jacques Chirac, such as Foreign Minister Alain Juppe.

Baroin and Pecresse are also from Chirac’s camp, but may still appeal to more center-leaning voters given their youth.

France has lost one of its most influential government ministers with Lagarde’s move to the Washington-based IMF.

Finance minister since Sarkozy came to power in 2007, she is replacing Dominique Strauss-Kahn following his arrest in New York in May for allegedly trying to rape a hotel chambermaid.

Strauss-Kahn’s exit from the April 2012 presidential race, where the center-left leader had been seen as the best chance for the opposition Socialist Party, has given Sarkozy a window to try and net centrist voters for himself and stop them backing a center-right rival, former energy minister Jean-Louis Borloo.

Sarkozy had been considering Agriculture Minister Bruno Le Maire for the finance minister position. Le Maire, 42, is a former adviser to another breakaway centrist, Dominique de Villepin, and a skilled politician rated as one of France’s most competent farm ministers.

Yet parliamentary sources said Baroin’s promotion was sealed following a stormy meeting late on Tuesday over whether he or Le Maire should get the job. Sources at the ruling UMP party said Baroin threatened to quit the government if he was overlooked.

“Baroin did not want to be taking orders from Le Maire, who is similar in age but came later to politics,” one source said.

Le Maire turned down an offer of taking Baroin’s job as budget minister, saying he preferred to stay where he was.

Pecresse, a former adviser to Chirac, speaks English, Russian and Japanese and has a strong academic pedigree.

She has shown toughness in her current job, pushing through difficult university reforms. Promoting her has allowed Sarkozy to put a woman back in a high-profile job, having lost several from his cabinet in past months.