President Sarkozy’s ambition of leading a united Europe through the global financial turmoil appeared to have sunk last night as Angela Merkel moved to guarantee German savings.

The German Chancellor’s initiative may have torpedoed Mr Sarkozy’s aim of ensuring coordinated action on crisis-hit banks in the European Union. It came less than 24 hours after the French president had summoned Gordon Brown, Mrs Merkel and Silvio Berlusconi, the Italian Prime Minister, to a summit in Paris designed to devise a EU strategy in the face of the upheaval. The move irritated EU leaders who were not invited, such as José Luis Zapatero, the Spanish Prime Minister.

Critics said that the snub would complicate the already difficult task of producing a single EU policy on the crisis. The obstacles were underlined in the final document from the Paris meeting, which contained vague commitments from Europe’s biggest economies to work together. There were few hard decisions other than the establishment of a £25 billion fund to support small business unable to secure loans from their banks in the credit cruch.

A plan floated by France and the Netherlands for a €300 billion bank rescue fund had been blocked by Britain and Germany even before the meeting had started. Mrs Merkel was always reticent to adopt the French approach of solidarité, which she saw as a roundabout way of asking Germany to finance rescue packages in other countries.

Her go-it-alone deposit guarantee measure – which came after she criticised the Irish Republic for doing almost the same thing – blew another hole in Mr Sarkozy’s dream. He had seen the crisis as a chance to impose France’s vision of a federal Europe and a regulated economy.

But his thinking is being overtaken by the urgency of a situation that is forcing national governments to deliver immediate action amid panic withdrawals and stock market plunges. With his customary bravado, Mr Sarkozy sought to present the summit as a French success.

“A bit disappointed? By what?” he said. “Those who follow these questions know there are an enormous amount of things in this text. What’s important is that in the face of a world crisis, Europe is existing and offering an answer,” he said.

French officials said that he had achieved his aim of persuading Europe’s other three biggest economies to back his call for a G8 summit to lay the foundations for “new international financial system”. They also claimed he had scored a decisive victory as European institutions agreed to ease the budget deficit limits imposed on members of the Eurozone.

With France perilously close to the ceiling, Mr Sarkozy is seeking space to pump money into a recession-hit economy without falling foul of Brussels.

Times Recommends

• Fish and chip shops ‘selling cobbler as cod’
• T in the Park festival at Kinross
• Body Watch