President Sarkozy is set for a showdown with Angela Merkel today after infuriating the German Chancellor with the launch of a €100 billion (£80 billion) French sovereign investment fund that he exhorted other European governments to copy.
Brushing aside Berlin's qualms, Mr Sarkozy yesterday outlined plans for the fund as part of a programme to strengthen public sector control over private business. He also promised €175 billion of direct state investment in the economy, over and above the sovereign fund, in the next three years.
Claiming that the financial turmoil had killed “the dictatorship of the market”, he pledged to lead Europe towards a new economic system, which opponents said bears a striking resemblance to the old French model of heavy state intervention.
Mr Sarkozy said the drive would be spearheaded by an investment vehicle - loosely described as a sovereign wealth fund - to be set up by the end of the year. The fund would “intervene massively each time a strategic company is in need of capital”.