France runs into German wall on EU growth drive

But he had to concede that Britain's cherished 29-year-old rebate from EU spending, about which he had noisily complained in the run-up to the summit, would have to remain untouched.

"We are seeing the Germans extending a hand more and more often to the British than to us," French political analyst Eric Zemmour said, suggesting Merkel's priority was to give Cameron ammunition at home to defend Britain's membership in the EU.

WIDENING GULF

Ultimately, cuts to an EU budget which in total represents barely one percent of the region's economic output are unlikely to influence how quickly it comes out of the current downturn.

However the clash between Paris and Berlin on the level of the euro currency points at deep-rooted differences in the national interests of the two countries that may prove more telling in the long run.

A study by Deutsche Bank last month calculated that France's exporters start being priced out of world markets when the euro rises above 1.22-1.24 dollars - a level it has already long left behind to trade at $1.33 now.

Germany's higher value-added export products, however, only start to be disadvantaged when the exchange rate is above $1.54. Until that point, there is little damage to the German economy and indeed some benefit in a strong euro because it keeps the prices of imported goods and hence inflation in check.

"We do not agree on economic policy and a number of other areas," Jean-Dominique Giuliani, head of the Robert Schuman Foundation, a French think tank on Europe, told Europe

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