Ridicule is a weapon not much used in modern British politics, let alone by decorous Germans. On the eve of this week’s EU summit, ridicule has been heaped on Gordon Brown, in a deadly put-down of his claims to financial leadership by Peer Steinbrück, the gritty Social Democrat finance minister in Angela Merkel’s coalition. Dismissing the temporary cut in VAT as a gimmick whose only lasting effect would be to “raise Britain’s debt to a level that will take a whole generation to work off”, he marvelled at the way “the same people who would never touch deficit spending are now tossing around billions”. It was, he added, “breathtaking” to see Britain’s “switch from decades of supply-side economics all the way to a crass Keynesianism”. His government, he added for good measure, was not going to join the bidding war to top up spending programmes: better to tell voters in all honesty that governments could mitigate but not avoid recession, than to take the risk of “burning money without significant effects”. Ouch.

All Downing Street could muster in retort was that this was really about German politics, not British policies, and that Angela Merkel had a much more sympathetic appreciation of the Prime Minister’s great global role. Nonsense. Mr Steinbrück’s outburst was merely an undiplomatic variant on his Chancellor’s pet themes. The two belong to different parties, but on fiscal policy, they are an item.

I never thought I should warm to Angela Merkel. But right now, when nobody does, I am finding her contrariness distinctly refreshing. In her new persona as “Frau Nein”, the German Chancellor stands accused not merely of fiddling while Europe burns, but of letting down the tyres of the fire engines. True, when the credit crunch turned acute this autumn she moved rapidly to shore up German banks, though her €500 billion rescue fund came (deliberately?) on such unattractive terms that there have been few takers. But once that had been done, and she had erected a flimsy little €12 billion “umbrella for jobs”, stipulating that the money had to be eked out over two years, the lady slammed the public spending safe shut and pocketed the key.

Nothing will move her: not Nicolas Sarkozy’s mocking “while France is working, Germany is thinking”; not Gordon Brown’s pompous sermons on the need for decisive leadership; not, even, the rising panic among Germany’s venerated economic “wise men” that Germany may be heading next year into its worst recession since the Federal Republic was founded in 1949. At last month’s annual conference of her Christian Democrat Union party (where, so firm is her political dominance at home, she retained the party leadership by one of those 95% margins commonly associated with non-democracies), she had this to say.

Germany would not “take part in a competition to outdo one another with an endless list of new proposals” – right hook at President “six-impossible-things-before-breakfast” Sarkozy, among whose multiple wheezes is saving the French economy by eliminating VAT on hairdressing bills and who, more seriously, quite obviously sees this crisis as a wonderful camouflage for state aid to his beloved “national champions”. Nor would she “participate in this senseless race for billions”, she said, exhorting her party to “have the courage to swim against the tide” – a left hook at the Brown jawbone. She has been blunt that America’s orgiastic resort to cheap money and wholesale bailouts could recreate the conditions that led to the current mess, and is likely to look on Barack Obama’s extra spending dry-eyed.

All this makes her the villain of the piece with Messrs Brown, Sarkozy and Barroso. They pointedly excluded her from their cosy little London get-together before the EU summit this week, and she is about as welcome at the main event as the Fairy Carabosse whose bad spell put the Beauty to sleep. You easily see why the lads are frustrated. Germany is a $3.3 trillion economy, entering recession with a budget proudly back in balance, a current account surplus this year that, at an expected $279 billion, is second only to China’s, an ample cushion of private and corporate savings and no housing bubble. It is far better placed to loosen the purse strings than France, let alone wildly overspent Britain. Without Germany, the €200 billion “coordinated fiscal stimulus” that Brussels wants to come out of this EU summit is a mirage, since all but €30 billion is supposed to come from national governments and the others just haven’t got that sort of money. What a time to play “good housekeeping”!

And, to add insult to injury, the Germans have happily gone Christmas shopping, and two-thirds of them say they have no plans to cut their (always frugal) personal spending. They seem positively cheered by having a Scrooge in the Chancellery. It may well be that the critics are correct, and that “Frau Nein’s” refusal even to consider tax cuts or further counter-cyclical spending before January at the very earliest is a mistake of historic proportions. But she knows her countrymen, and I suspect that, for them, a massive government spending binge would be the fiscal equivalent of shouting fire in a crowded cinema.

Germans are profoundly averse to debt, and, since the collapse of the currency in the Weimar Republic in the 1920s, they have remained terrified of inflation. Nor do they trust pump-priming; that was tried in the 1970s after the first oil shock, they point out, and all it did was drive up public debt. Their reaction to emergency spending by government is to save against the day when the bills come due. More debt today, they reckon, means higher taxes tomorrow. A Chancellor who keeps her powder dry is just their cup of chocolate.

The really interesting question, though, is whether the Germans are alone in thinking like this. Mr Brown’s gamble is that we Brits will actually be cheered by borrowing that puts him on course to double the national debt – debt we know will have to start being repaid almost immediately, probably before the country has fully emerged from recession. The core argument here is about confidence: confidence in balance sheets, confidence in job prospects, confidence to invest – and confidence in public policy. There’s bound to be an element of smoke and mirrors – and Frau Nein may turn Lady Bountiful nearer to next September’s German elections – but policy must amount to more than confidence tricks. That is the Merkel message, and it’s a needed corrective to illusions about “saving the world”.

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