EVEN when he is on holiday in America, Nicolas Sarkozy does not seem to stop. From the picturesque shore of a lake in New Hampshire last week, France’s “hyper-president” kept a hawkish eye on developments back home, issuing press releases on everything from the death of a popular jazz musician to the malfunction of a fairground ride.

His dynamism appears to be paying dividends in France, where business confidence has risen and unemployment has fallen to its lowest level in 25 years. The “French renaissance” was making waves abroad as well, particularly in Germany, where irritation has grown over a resurgent France striking out on its own.

The rest of the world is watching with interest: potential foreign investors, particularly from Britain and America, who had been put off by the country’s distaste for “Anglo-Saxon” capitalism, have been heartened by Sarkozy’s pro-market rhetoric.

Will France challenge German dominance of the European Union? The economy is beginning to show signs of revving up.

“There has definitely been a change of feeling,” said Nina Mitz, president of the business consultants Financial Dynamics in France. “There is a feeling that anything is possible. That things are being dealt with. There is activity. A feeling of energy.”

Sarkozy has promised to get his country working again after more than a decade in which it seemed only to snooze under Jacques Chirac.

The jet-setting “Sarko” has given the impression of being everywhere, hence his other nickname of hyper-president. On Friday he flew to Paris to attend the funeral of a cardinal. Yesterday he was back in America, joining Cécilia, his wife, for lunch with George and Laura Bush at the US presidential family’s holiday home in Kennebunkport, Maine. Sarkozy’s perpetual blur of motion is not limited to the world stage.

Seldom has such a legislative blitzkrieg been seen in the French national assembly.

A special summer session of parliament was ordered to push through a package of laws that will cut taxes for those who pay mortgages and work overtime, lower the maximum amount of tax to which an individual can be liable to 50% of their income and grant more independence for universities.

The legislation will also make it obligatory for unions to provide minimum transport services during strikes. A portion of all retiring civil servants will not be replaced. Unemployment benefits will be conditioned on active job hunting. It is all part of a wider reform, says Sarkozy, to restore France’s appetite for work and boost its productivity.

People seem to take him at his word. “With the arrival in power of Mr Sarkozy, there’s a feeling that France is opening towards the West,” said the Franco-British Chamber of Commerce.

The emphasis on wooing foreign business has been exemplified by Sarkozy’s appointment of Christine Lagarde, an American-educated lawyer, as his finance minister.

She shares Sarkozy’s disdain for the 35-hour working week and recently appealed for more productivity, saying: “France is a country that thinks. There is hardly an ideology that we haven’t turned into a theory . . . enough thinking, already. Roll up your sleeves.”

It seems to be having an effect: the business climate indicator went up and unemployment has fallen to 8%, the lowest in nearly a quarter of a century. Growth was forecast at 2.25% this year, up from 2% last year. Sarkozy hopes that the reforms will push it much higher.

This new French energy has brought Sarkozy into conflict with Germany, particularly when France seemed to steal the credit for Libya’s release of five Bulgarian nurses and a Palestinian-born doctor after months of painstaking negotiations by the European Union. Even more irritating for the Germans was Sarkozy’s decision to sell a nuclear power plant and weapons to Libya without telling Berlin.

To make matters worse, Sarkozy has been campaigning to bring the European Central Bank under political control in order to help French exports against an extremely strong euro. Such thinking is anathema to the Germans. “Sarkozy is really beginning to get on German nerves,” Der Spiegel, the weekly magazine, announced recently.

“In foreign policy there should be agreement with European partners,” said Ruprecht Polenz, a member of the Christian Democrats, the party of Angela Merkel, the chancellor. “Even if it takes time, France should act to strengthen the common European foreign and security policies.”

Some in Berlin suspect Sarkozy wants to oust Merkel as Europe’s most influential leader. German diplomats were appalled when France discussed with all its main partners, except Germany, the decision to put forward Dominique Strauss-Kahn as the EU’s candidate to head the International Monetary Fund. “Sparks are flying,” said a Merkel adviser.

Sarkozy’s domestic critics acknowledge his style - Vanity Fair magazine put him in its list of the world’s best-dressed men - but wonder if he will deliver.

He has watered down some of the reforms that he promised on the campaign trail: originally he had wanted to replace only one third of retiring civil servants to streamline the bloated bureaucracy. Under the new law, some ministries will be allowed to replace one half of retiring workers.

A big test of Sarkozy’s ability to revolution-ise France will come in the autumn when protests can be expected against the reforms.

Additional reporting: Nicola Smith

How far could the French go?

Why is Nicolas Sarkozy making such a difference?

He has been likened to Napoleon and seems to have the energy of a nuclear reactor, burying himself in every detail of government. Lunch with the Bushes at Kennebunkport, Maine, yesterday was symbolic of the change. Jacques Chirac, the former French leader, was hostile to America and “Anglo-Saxon” capitalism in general. “Sarko” is not and hopes to “deMarxify” France, which is sometimes described as a sort of “luxury Soviet Union”.

What has he actually done?

He has ditched outdated French rites such as the amnesty usually granted by incoming presidents for unpaid traffic tickets and the release of thousands of prisoners from overcrowded jails on Bastille Day. Parliament recently approved one of the country’s biggest packages of tax cuts. Other reforms will ensure a minimum public transport service in the event of strikes. Unemployment benefit will depend on active job hunting. The bloated bureaucracy is being streamlined and 22,700 posts will be left unfilled next year. More independence for universities is likely.

Is France about to take off?

It’s too early to say, but unemployment has fallen and the growth forecast is up, as is business confidence. The hardest reforms are still to come, however, and social unrest in the autumn could test Sarkozy’s determination to press on.

How will it affect the rest of us?

Sarkozy has big global ambitions for France after more than a decade in which it did little other than oppose the war in Iraq. Sarkozy almost single-handedly resurrected the European Union constitution. Other initiatives have put him into conflict with the Germans but yesterday’s lunch with the Bushes could herald the birth of a French “special relationship” with America to rival the fabled - but faltering - British one.

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