By Claude Canellas and Dominique Vidalon
BORDEAUX/PARIS (Reuters) - Outspoken French Industry Minister Arnaud Montebourg accused European Commission President Jose Manuel Barroso on Sunday of fueling far-right groups across Europe as France's National Front made gains in a parliament by-election.
Montebourg said the EU was alienating ordinary Europeans by ignoring their concerns. The comments mark an escalation in tensions between Paris and Brussels, already at loggerheads over France's refusal to allow subsidies to its cinema and other cultural sectors to be reviewed in future EU-U.S. trade talks.
Opposition French conservatives on Sunday narrowly saw off the anti-immigrant, anti-EU National Front of Marine Le Pen in a by-election in the southern town of Villeneuve-sur-Lot. President Francois Hollande's ruling Socialists had already been eliminated in a first round a week ago.
"The European Union is paralysed. It does not respond to any of people's aspirations in the industrial, economic or budgetary fields and in the end it provides a cause to all the anti-European parties," Montebourg told France Inter radio.
"Mr. Barroso is the fuel of the French National Front, that's the truth. He is the fuel of Beppe Grillo," he said, referring to the leader of the populist 5-Star Movement which won a quarter of the vote in Italy's February election.
Hollande, his popularity ratings on the slide over a failure to tackle rising unemployment, said his government "had lessons to learn" from the defeat in the constituency, vacated after one of his ministers quit in a scandal over a secret Swiss bank account.
His Socialists still have a majority in the lower house of parliament where he is due to pursue economic reforms such as a pension review later this year, but that majority has now dropped to a slim three seats.
"TASTE OF VICTORY"
The UMP's Jean-Louis Costes scored 53.8 percent to win the runoff vote, yet a strong score of 46.2 percent by National Front candidate Etienne Bousquet-Cassagne underscored a surge in populist sentiment as France grapples with record unemployment.
Both Bousquet-Cassagne and National Front Vice President Florian Philippot hailed the result as an ideological victory for an anti-Europe and anti-immigrant party that has been pushing hard in recent years to enter mainstream politics.
"It's a defeat that has a little taste of victory," said Bousquet-Cassagne, a 23-year-old business student.
UMP leader Jean-Francois Cope celebrated his candidate's win but said the far-right score was a "serious warning".
Montebourg, a leading critic of austerity policies in Europe, was speaking after Barroso this month attacked what he called a "reactionary" anti-globalization agenda among some in Europe - comments which many in France saw as directed at them.
Aside from his own Socialists, Hollande can also count on support from other left-wing and Green allies.
Yet a small fringe on the left is showing the stirrings of a revolt as Hollande bows to European Commission demands to cut spending and loosen labour rules, and disillusioned voters give the president dismal approval ratings of around 25 percent.
Sunday's result marked the eighth Socialist Party defeat in a by-election since Hollande came to power just over a year ago.
"This is the proof that we are really taking root," National Front Vice President Florian Philippot told i<Tele television.
"I see this as a tremendous advance."
The National Front won nearly a fifth of the first-round vote in the presidential election as its leader Marine Le Pen campaigned on keeping jobs for the French and ditching the euro.
The party has two seats in the 577-seat National Assembly.
(Additional reporting by Dominique Vidalon; Writing by Catherine Bremer; Editing by Mark John)