Nick Clegg tells France to stop attacks

France was told by Nick Clegg today to end "simply unacceptable" attacks on the UK economy amid mounting cross-Channel tensions over the eurozone crisis.

French prime minister Francois Fillon telephoned the Deputy Prime Minister to insist he had not intended to call into question the UK's credit rating.

Mr Fillon and the head of the French central bank had suggested Britain was a candidate for a downgrade amid fears in Paris that France might lose its coveted AAA rating.

His finance minister Francois Baron further inflamed the situation today by calling the UK's situation "very worrying" and suggesting France was better off.

Downing Street resisted any direct retaliation but Mr Clegg launched a furious retort in his conversation with Mr Fillon.

A spokesman said: "PM Fillon called from Rio de Janeiro to clarify his recent comments about the UK's credit rating.

"Fillon made clear it had not been his intention to call into question the UK's rating but to highlight that ratings agencies appeared more focused on economic governance than deficit levels.

"The Deputy Prime Minister accepted his explanation but made the point that recent remarks from members of the French government about the UK economy were simply unacceptable and that steps should be taken to calm the rhetoric.

"PM Fillon agreed and they both undertook to speak again shortly to discuss economic cooperation."

The row broke out following Prime Minister David Cameron's decision to veto a pan-EU treaty to deal with the crisis in the single currency.

The French prime minister called from Brazil, where he yesterday questioned why rating agencies were reviewing France's status but not looking so closely at the UK.

"When I look at our British friends, who are even more indebted than us and carrying a bigger deficit, what I see is that the ratings agencies so far don't seem to have noticed," he said.

Two agencies have indicated they are considering marking down countries across the eurozone.

Banque de France governor Christian Noyer said a downgrade for France - which would drive up the interest Paris pays to borrow and make loans in the wider economy more expensive - "doesn't strike me as justified based on economic fundamentals".

"Or if it is, they should start by downgrading the UK, which has a bigger deficit, as much debt, more inflation, weaker growth and where bank lending is collapsing," he added.

His comments came a day after President Nicolas Sarkozy was quoted as branding David Cameron an "obstinate kid" for refusing to sign up to the treaty to rescue the euro last week.

Downing Street has avoided being drawn into a spat - stating simply that the UK had a "credible" plan endorsed by many international bodies, a point it said was underlined by low bond yields.

News of Mr Clegg's rebuke came as officials in Brussels set out details of how efforts towards securing a "fiscal compact" to resolve the crisis in the single currency would be conducted.

It was confirmed last night that British officials will take part in "technical discussions" on new eurozone arrangements despite Mr Cameron exercising Britain's veto against EU treaty change.

The move will be seen as an olive branch both to the other EU countries and Mr Clegg, whose Liberal Democrat MPs abstained en masse in a Commons vote in protest at the veto.

Number 10 said the officials would be there "to ensure that the views of the UK are represented and our national interest is maintained".

Mr Cameron has been engaged in phone calls with other EU leaders - with German Chancellor Angela Merkel, who with Mr Sarkozy is leading the reform process - among those who telephoned him today.

He has also had a number of conversations with counterparts from among the other nine EU member states which do not use the single currency.

The UK was alone in refusing to sign up to a deal of all 27 member states a week ago, but cracks have appeared within in the group of 26.

Hungary and the Czech Republic have said they would not join the new agreement unless plans for tax harmonisation were dropped.

Downing Street rejected suggestions that Mr Cameron was agitating against the deal however.

Labour leader Ed Miliband said the Prime Minister had left the UK as "simply an observer.

"The best thing we can do is get back round that table and fight for Britain," he said.

Under the framework published in Brussels, the new agreement on "Reinforced Economic Union" will come into force when at least nine of the participating EU member states have ratified the deal.

Up to 26 of the 27 countries will sign on, but only the 17 eurozone member states are automatically bound by the new rules on debt and deficit limits.

All "contracting parties" must enshrine the new accord in national law, and are bound by automatic "excessive deficit procedure".

The document also stipulates that the rules will be enforced if necessary by the European Court of Justice, and any judgment will be binding.

There will be close co-ordination between representatives of national Parliament economic and finance committees, goes on the document, with informal "Euro summit" meetings taking place at least twice a year.

British officials emphasised that the decision to invite the UK to take part in such meetings with "observer" status does not preclude talking: "We can observe and talk and we will want to ensure that decisions taken by the others are fully compatible with the single market."

PA