Ridicule is a weapon not much used in modern British politics, still less by decorous Germans. On the eve of this week's EU summit, ridicule has been heaped on Gordon Brown, in a deadly putdown 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 main 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 “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”. Germany, he added for good measure, was not going to join the bidding war to boost spending. Better to be honest with voters about the limits of government power than to take the risk of “burning money without significant effects”. Ouch.

Mr Brown rather lamely retorted that this was all about German politics, not British policies. Downing Street hints that Ms Merkel really supports the Prime Minister's great global mission. 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 was quick to shore up German banks, though the terms of her €500 billion rescue fund were (deliberately?) so unattractive that there have been few takers. But once that was done, and she had erected a flimsy little €12 billion “umbrella for jobs”, spread 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 Mr Brown's pompous sermons on the need for leadership; not, even, the rising panic among Germany's venerated economic “wise men” that their country may be heading into its worst recession since the Federal Republic was founded in 1949. At last month's conference of her Christian Democrat Union party - where she won re-election as party leader by one of those 95 per cent 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 axing VAT for hairdressers and who, more seriously, quite obviously sees this crisis as a way to resurrect state aid for his beloved “national champions”.

Nor would she “participate in this senseless race for billions”. In a left hook to the Brown jaw, she exhorted her party to “have the courage to swim against the tide”. All this makes her the villain of the piece for Messrs Brown, Sarkozy and Barroso, who pointedly excluded her from their cosy little pre-summit get-together in London. She is about as welcome at the main event as the Fairy Carabosse whose bad spell put the Beauty to sleep.

You 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 of about $279 billion, second only to China's, ample private and corporate savings and no housing bubble. The proposed €200 billion “co-ordinated fiscal stimulus” drawn up in Brussels is a mirage without Germany: all but €30 billion is 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 seem positively pleased to have a Scrooge in the Chancellory. They are busy Christmas shopping, and two thirds say they have no plans to cut their (always frugal) personal spending. It may well be that the critics are correct, and that Frau Nein's refusal to consider tax cuts or further countercyclical spending before January at the very earliest is a mistake of historic proportions. But she knows her compatriots, and I suspect that, for them, a Brownite 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; they tried that after the 1973 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 that 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 to invest, confidence in job prospects - 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”.

Rosemary Righter is associate editor of The Times

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