Sarkozy out on a limb as Germans side with Cameron

By Hugo Duncan, Tim Shipman

A week ago it was Britain that looked isolated from Europe following David Cameron's veto of a eurozone treaty.

But yesterday it was France and its president Nicolas Sarkozy who seemed to have no friends left after a devastating triple whammy.

First, French prime minister Francois Fillon was rebuked by Nick Clegg, who said a series of provocative comments about the British were 'simply unacceptable'.

Secondly, amid fears that the floundering French economy is heading for the rocks, a report revealed that nervous British banks pulled almost £20billion out of the country between July and September.

Thirdly, German Chancellor Angela Merkel told David Cameron she wants to resist Mr Sarkozy's grandiose plans to redraw EU rules and undermine Britain's interests in the EU single market.

Mr Cameron's relationship with Mr Sarkozy - forged during the war in Libya - appears to have broken down, with Downing Street announcing that he has 'no plans' to talk to the president.

Pointing the finger: France's Prime Minister Francois Fillon tried to deflect scrutiny of the French economy by criticising Britain

On Wednesday, Mr Sarkozy dismissed the Prime Minister as an 'obstinate kid' over his use of the veto in Brussels. And Mr Fillon put the boot into Britain, declaring: 'Our British friends have a higher deficit and debt [than us] but it seems the ratings agencies have not yet noticed.'

Early yesterday French finance minister Francois Baroin took another pot shot at the UK just 24 hours after the head of the Bank of France called for the UK's credit rating to be downgraded.

'The economic situation of Great Britain is very worrying,' said Mr Baroin.

'From the point of view of the economy, it is preferable to be French than British at the moment.'

Amid British fury at the attacks, Mr Fillon was forced to ring David Cameron's Europhile deputy Nick Clegg and explain himself.

A Cabinet Office spokesman said: 'Mr Fillon made clear it had not been his intention to call into question the UK's rating but to highlight that ratings agencies appeared more focused on economic governance than deficit levels.

'The Deputy Prime Minister accepted his explanation but made the point that recent remarks from members of the French government about the UK economy were simply unacceptable and that steps should be taken to calm the rhetoric.'

No 10 suggested that the aggression was the result of sour grapes over Britain's veto last week and pointed out that 'numerous international organisations' have endorsed the UK's plans to tackle the deficit.

Ratings agency Standard & Poor's has put France on warning that its AAA credit rating is at risk while Britain's is 'stable'.

And it emerged that British banks voted with their feet over the summer and cut their exposure to France by £18.8billion or nearly ten per cent, to £177billion. A report by the Bank of England underlined just how worried is the City of London about the French economy and its exposure to the eurozone.

British banks also pulled a combined total of £13billion out of debt-ridden Italy and Spain and invested in Germany and the U.S. instead.

Last night another ratings agency, Fitch, announced it is considering downgrading the ratings of Italy, Spain, Ireland, Belgium, Slovenia and Cyprus.

It said that 'a comprehensive solution to the eurozone crisis is technically and politically beyond reach'.

With criticism that the treaty unveiled last week was a 'Loch Ness monster: most people have heard about it but no one has seen it', Brussels officials yesterday offered fresh details.

Eurozone countries will have to get their total debt levels below 60 per cent of national income and limit annual budget deficits to 3 per cent of GDP.

But Chancellor Merkel told Mr Cameron yesterday she wants the new deal to concentrate on new rules to enforce fiscal discipline - not result in an assault on the single market.


- Daily Mail

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