THE outline of a new European landscape, both welcome and a challenge to Britain, will be sketched in a Paris townhouse tomorrow when Angela Merkel, Germany’s probable next Chancellor, meets Nicolas Sarkozy, France’s would-be next President.

Frau Merkel, the Christian Democrat leader, holds a comfortable lead on the Social Democrat Gerhard Schröder before the election in September. M Sarkozy, the chief of President Chirac’s Union for a Popular Majority and the most dynamic figure in French politics, is hoping to replace M Chirac in 2007. The meeting is their first since Frau Merkel won her party leadership.

She is a stolid east German and he is a slick Paris lawyer-politician, and they are not close personally. But the ambitious 50-year-old conservatives share so much common ground as pro-Atlantic, market-minded reformers that their possible rise to office in tandem conjures visions of a remarkable shift in continental power.

Under a Chancellor Merkel and a President Sarkozy, today’s weak and defensive Paris-Berlin axis could give way to an easier alliance with Britain.

Although she avoids the obvious comparison, last week Frau Merkel praised the “very positive role” that Margaret Thatcher had played in overhauling the British economy, which has now overtaken Germany’s in per capita income.

M Sarkozy infuriated M Chirac last week by saying that France, also trailing Britain, needed a Thatcher and a Blair to kick life into its economy and scrap “the policies of 50 years ago”.

Both say that their nations need to move away from their old view of themselves as the EU’s managing partners and repair links with Washington. The French press refers to “Sarkozy l’Américain”.

Yet a healthy new ParisBerlin alliance, while broadly aligned with Tony Blair’s view of the world, may not be such a welcome prospect for the Prime Minister. A Merkel-Sarkozy agenda, potentially more self-confident than any since the days of President Mitterrand and Chancellor Kohl in the 1980s and 1990s, would create a different type of axis, but it would remain opposed to some important British goals.

These include further EU enlargement. Both Frau Merkel and M Sarkozy want Turkey to be excluded from Europe permanently — a position popular in both countries but not supported by their present goverments.

The pair, although more open to globalisation than their defensive elders, would continue to pursue deeper European integration despite difficulties over the constitution. Pragmatic and market-friendly, they nevertheless remain sympathetic to industrial policies in which the State promotes national “champions”. Frau Merkel is M Chirac’s guest this week and her aides are reluctant to feed speculation of a rift. “The thinking in the Merkel camp is plainly that Chirac has passed his sell-by date,” one diplomat said. “But she would be really ill-advised to let that seep into the public domain. She will have to work with or around him on some key European projects from the day after she wins.”

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