End of the affair for Sarkozy and Merkel after serial blunders

Problems are piling up for Nicolas Sarkozy. Relations between the French President and the German Chancellor, Angela Merkel, are said to be deeply strained. Serious tensions are starting to appear in the French government. The economy is beginning to stutter. M. Sarkozy's domestic popularity, which was in the stratosphere until last month, is drifting downwards.

At the heart of all these problems lurk questions about the all-action style of the new President and doubts about the direction and substance of the radical reforms which he has promised to deliver.

The newspaper0 Le Monde, reviewing the President's difficulties yesterday, recalled one of the favourite political maxims of his predecessor, Jacques Chirac: "Les merdes volent en escadrilles" (Shit flies in formation).

After a seemingly charmed first three months, M. Sarkozy has run headlong this week into the limitations of his "look-at-me, I'm-in-charge" approach to government.

According to a flurry of stories in the German and French press, M. Sarkozy has deeply angered Chancellor Merkel. After a Franco-German summit in Berlin on Monday, M. Sarkozy lectured the Germans publicly on the need to abandon their opposition to nuclear energy. This is a highly sensitive political issue in Berlin.

Chancellor Merkel is already said to have been angered by M. Sarkozy's peremptory approach to a series of disputes, including the future of Eads, the Franco-German company which makes the European Airbus. He upset Berlin and other European capitals by seizing the credit for the release in July of the Bulgarian and Palestinian medics imprisoned in Libya.

Chancellor Merkel is said to fear that M. Sarkozy wants to create a protectionist European Union, and maybe a protectionist France. On a more personal level, she is said to have been irritated by his insistence on kissing and touching her in public.

At the same time, signs have appeared in the past few days of a rift between M. Sarkozy and his Prime Minister, François Fillon. On Sunday, the Prime Minister said he was ready to push ahead with a potentially explosive reform of the generous, early pension provisions for railway and other public-sector workers. This was the issue that brought France to a halt in the winter of 1995-96 and undermined a previous centre-right government.

M. Sarkozy has since let it be known that M. Fillon was talking out of turn. He said that the issue needed to be solved but with "a little more method". The Elysée Palace has said there will be a long period of consultation with unions to try to agree a very gradual reform of pension rights. This may be politically astute but is hardly the kind of "rupture" with the past promised during M. Sarkozy's election campaign.

Other straws in the wind suggest the beginnings of dissent within the Sarkozy-Fillon government on the pace and direction of reform. Contrary to his own carefully crafted image as a fearless man of action, it is M. Sarkozy who appears to be insisting on the kind of softly-softly approach that he mocked in previous centre-right governments.

Plans, not yet formally presented, for increases in VAT to reduce the burden of payroll taxes on industry have been kicked into touch. M. Sarkozy has also delayed for one week a detailed announcement on job cuts in the civil service.

The Finance Minister, Christine Lagarde, infuriated the President last week by announcing that there would be a policy of "rigour" – severe cuts. M. Sarkozy is said to be anxious not to upset the powerful civil service unions which have blocked similar programmes in the past.

Two opinion polls yesterday showed M. Sarkozy's popularity starting to fall sharply from its peaks of 67-70 per cent in July. At the same time, the European Commission published figures confirming an earlier OECD forecast that the French economy would fall far below its forecast growth of 2.4 per cent this year.

There was another puzzling example this week of the Sarkozy approach: a bold and populist pronouncement, short – or self-contradictory – on detail.

At a meeting of farmers in Rennes, the President announced he would push for a "new" European farm policy when France takes over the presidency of the EU council in the second half of next year. Previously, France had opposed all reform of the Common Agricultural Policy (CAP) until a review in 2013.

M. Sarkozy spoke of the need to move to a system where farmers received no public subsidies but lived on the prices that they received for their produce. He went on to say, however, that the EU should adopt a system of "community preference" to keep out cheap produce from the developing world.

On the one hand, he appeared to be proposing a liberal reform. On the other, he appeared to be pushing for a return to the "old" CAP system of guaranteed prices, steep taxes on imported food and export subsidies to dump European surpluses on the world market. Such a CAP would run counter to all changes in EU farm and trade policy for the past 20 years. It would bring President Sarkozy on to a collision course, not only with Chancellor Merkel, but also with Gordon Brown.