French budget minister probed over Swiss bank account

President Francois Hollande (L) is standing by Budget Minister Jerome Cahuzac (R)

Prosecutors in France say they will investigate allegations of tax evasion surrounding Budget Minister Jerome Cahuzac.

French media reported last year that Mr Cahuzac held a bank account in Switzerland for more than 20 years.

Mr Cahuzac denies the allegations, first made by the investigative website Mediapart, and is suing for defamation.

He has welcomed the investigation which he said would prove his innocence.

French Prime Minister Jean-Marc Ayrault has expressed full confidence in the former plastic surgeon who is trying to balance France's budget.

But the prosecutor's office in Paris said that given the sensitivity of the allegations and the time it would take to investigate them, it had "decided to open a preliminary investigation for tax fraud".

Mediapart claimed last year that Mr Cahuzac had held an account with UBS in Switzerland until 2010, when he was appointed head of the French parliament's finance commission.

As evidence they produced a tape recording of what was purportedly Mr Cahuzac in which he talked about his embarrassment at holding a Swiss bank account.

Mr Cahuzac told the French parliament in December: "I don't have, I never have had, accounts abroad."

The story has dominated French media over Christmas and the New Year.

Mr Cahuzac is one of the most prominent members of France's Socialist government, charged with reducing France's budget deficit, which is running at close to 5% of GDP.

One measure to plug that gap is the imposition of a new 75% top rate of tax on those who earn more than 1m euros (£817,400), a tax band which has been attacked by many French entrepreneurs and forced several well-known names including Gerard Depardieu into tax exile.