PARIS (AFP) - Frances President Nicolas Sarkozy named Prime Minister Francois Fillon head of a new smaller and more right-wing government Sunday, setting the stage for his undeclared 2012 re-election bid. Despite months of intrigue in the run-up to the reshuffle, Sarkozy retained his big hitters, while shifting rightwards in favour of a team more likely to fall in behind his governments deficit-cutting austerity agenda. Under a strengthened Fillon, Finance Minister Christine Lagarde and Interior Minister Brice Hortefeux remained in their jobs, while several other Sarkozy loyalists were promoted or saw their responsibilities widened. Meanwhile, centre-right Environment Minister Jean-Louis Borloo the number two figure in the outgoing government and until recent days a frontrunner to become prime minister himself announced he was stepping down. Popular Foreign Minister Bernard Kouchner, a former Socialist minister, was replaced by Gaullist Justice Minister Michele Alliot-Marie, and right-wing former prime minister Alain Juppe returned to government to take over defence. In an ominous sign of splits in Sarkozys support base, the outgoing defence minister, centre-right leader Herve Morin, denounced the new cabinet line-up as a right-wing campaign team in which he had no place. France needs pluralism, and democracy needs balance. Since April 2010 the head of state has not agreed with this proposition, and so for my part I cant remain in government, said Morin, who is mulling running against Sarkozy. The new cabinet will also be less ethnically diverse, with the loss of outgoing urban development minister Fadela Amara, who is of North African descent, and sports minister Rama Yade, who was born in Senegal. Fillon vowed to boost Frances anaemic recovery and cut unemployment, and praised what he boasted was the commitment of Sarkozy and his right-wing parliamentary majority to stick by unpopular but necessary reforms. Much ado about nothing, snorted Jean-Marc Ayrault, head of the Socialist oppositions parliamentary group, branding Sarkozys decision to stick with Fillon after toying with other candidates an admission of weakness. Analyst Roland Cayrol of the Sciences Po school in Paris said the limited nature of the reshuffle, and in particular Sarkozys failure to replace Fillon, showed up the weakness of the formerly all-powerful omnipresident. There was a reshuffle simply because the president wanted to change the prime minister to show he was entering the closing straight with a second wind, with change ... and he ended up chosing the same man, he marvelled. Gael Sliman of the BVA polling institute said Sarkozy appeared to have realised that, whether or not he sacked the more popular Fillon, he and he alone would be held reponsible for his governments policies. Sarkozy had first signalled in March he planned to reshuffle his cabinet, and there has been mounting political tension since he confirmed this in June, as Fillon jostled with several other candidates for his job. Since the reshuffle was mooted, two ministers have resigned over expenses scandals and another, Labour Minister Eric Woerth, clung on until Sunday despite being implicated in a probe into alleged illegal party funding. The government has stumbled forward stubbornly, but its leader has plumbed new depths of unpopularity and many observers view the reshuffle as Sarkozys last chance to seize control of the agenda before 2012. Sarkozys own opinion poll approval ratings have dropped to around 30 percent, as voters turn their backs on his domineering personal style or are outraged by austerity measures like his raising of the retirement age. A new poll, conducted by Viavoice for the left-wing daily Liberation just before the reshuffle began, showed Sarkozys popularity flatlining at its lowest ever level, and Fillon beating him by 20 percentage points. In recent months Sarkozy has taken a sharp swerve to the right on law and order and immigration issues, sparking international outrage with a drive to expel Roma Gypsies back to their homelands in Eastern Europe. Before the reshuffle, there had been widespread speculation that Sarkozy would try to mollify the centre-right by appointing Borloo in Fillons place, but Fillon, who has support on the right, fought to stay on.