Merkel puts Sarkozy in his place during row over finance
Franco-German relations hit a new low yesterday after Angela Merkel slapped down Nicolas Sarkozy to assert Germany's control over the European Union's economic recovery.
The French president surrendered to the German chancellor's demands on EU economic governance and her idea of "red cards" for member states that break Brussels's spending rules.
Mr Sarkozy had been determined to create an "economic government" of the 16 eurozone countries with a powerful secretariat to co-ordinate national budgets and tax.
But Mrs Merkel insisted that it extend to all 27 states, with the euro continuing to be run by the European Central Bank. She won out after a tense meeting saying it was a red-line issue for Germany.
Mr Sarkozy was then bludgeoned into accepting a German ultimatum that eurozone states that persistently breach budget deficit limits should have their voting rights suspended on economic issues, even if that requires changing the EU treaty.
The French surrender came days after Mrs Merkel said Germany would embark on an €80bn austerity programme.
France initially criticised the move but then announced its own €100bn austerity drive.
Mrs Merkel is under intense domestic pressure to tread on Mr Sarkozy. She was criticised for letting France strong-arm her into signing up to a €900bn bailout for euro states. (© Daily Telegraph, London)