<i>L'état, c'est moi</i>: the cult of Sarko

Never before has a 23-year-old student's announcement that he's withdrawing a job application caused such waves of astonishment and relief. Last night Jean Sarkozy, the son of the French President, abandoned his dream of taking over the political leadership of the huge La Défense skyscraper park just west of Paris.

The announcement by the young man, on the television news, brought to an end a battle of political wills which appeared, in recent days, to have pitted the Sarkozy clan against almost the whole of France, from the press and public to the President's own party and Prime Minister.

The tangled and absurd affair of the fast-track political ambitions of "Prince Jean" has – along with a series of other mis-steps, accidents and embarrassments – shaken the trust of the French people in their hyperactive, can-do President. Last night's U-turn, although elegantly handled by the younger Sarkozy, may have come too late to repair the damage.

Asked if the head of state had played a part in the decision, Jean Sarkozy told the France 2 nightly news: "If you're asking me if I've spoken to the President, the answer is 'No'. If you're asking me if I've spoken to my father, the answer is 'Yes'."

Nicolas Sarkozy reaches the half-way point of his five-year presidency in a couple of weeks' time. There is no serious alternative to him, either on the left or within his own political family, the centre right. His handling of the global recession has been reasonably sure-footed at home and influential abroad. His much-trumpeted programme of reforms has proved to be incremental and cautious, rather than revolutionary, but far from pointless.

Nonetheless, with half of his mandate still to run, President Sarkozy's carefully constructed public image as a "different" kind of French politician – a man who governs in the interest of ordinary people, not elites or special interests; a man who understands the reality of life for "people who rise early" – is in danger of falling apart.

The Hauts de Seine council west of Paris, dominated by the President's cronies, had been due today to rubber-stamp Jean Sarkozy's bid to become the political leader of the body which manages La Défense, the biggest single office development in Europe. Until last night any suggestion that this was a bad idea in a Republic which (in theory) guillotined inherited, aristocratic privileges more than 200 years ago had been dismissed by President Sarkozy as an ignoble attack on his family.

Jean is the second son of the President's first, of three, marriages. He is repeating, for the second time, his second year as a law student. The President insisted that Jean's meteoric rise, to become the centre right leader on the Hauts de Seine council last year, and to covet the leadership of La Défense, could be explained entirely by due, democratic process and his son's extraordinary abilities.

In country where young people struggle to find jobs and, if employed, struggle to be taken seriously, the clamour of angry protest grew and grew. For the first time since his election in May 2007, under increasing pressure from within his own camp, President Sarkozy was forced last night into a humiliating public climbdown.

This afternoon will also see the end of the Clearstream trial in which the former prime minister Dominique de Villepin is accused of spreading lies to destroy Mr Sarkozy's rise to the presidency in 2004. Whatever the rights and wrongs of the affair, Clearstream has also become a trial of the narcissistic style, and questionable political judgement, of President Sarkozy. After doing everything possible to ensure that the prosecution of Mr Villepin went ahead, the President referred to his former colleague on TV, just before the hearings began three weeks ago, as a "guilty man". He later "regretted" making any comment on the trial, but declined to withdraw or apologise.

"The present style of government in France is closer to Putin than De Gaulle", "The cult of personality around Sarkozy ... the centralisation of power are taking us towards a Stalinism of the right", "As far as I am concerned, a page has been turned. I can no longer support, directly or indirectly, such an abuse of power".

These comments (and many similar ones) were to be found this week in an online forum conducted by France's best and most respected newspaper, Le Monde. The contributors are not long-time Sarkozy-baiters on the left or far right. All claim to be once-enthusiastic members of Mr Sarkozy's Union pour un Mouvement Populaire (UMP).

Many of the parliamentarians representing the UMP have been in off-the-record revolt against Mr Sarkozy – on Prince Jean and other issues – for days. Even the long-suffering Prime Minister, François Fillon, was said to have been considering whether he could continue in the government. Officially, Mr Fillon, largely marginalised by the President's compulsive greed for the limelight, is fully behind Mr Sarkozy. Privately, according to the investigative newspaper Le Canard Enchainé, Mr Fillon spoke of the Jean Sarkozy affair as an "enormous mistake... one that gives a catastrophic image of Nicolas Sarkozy at home and abroad."

As Mr Fillon points out (according to Le Canard), the timing of the saga of Prince Jean made it doubly and triply devastating. Although France did not fall as rapidly and as deeply into recession as Britain, the economic suffering is still spreading and could last longer. At the same time, Mr Sarkozy's own troops on the centre right are beginning to question the direction in which their "hyper-President" is leading the country.

After promising to rid France of the allegedly effete values of a post-1968, lefty-liberal political "elite", Mr Sarkozy recently appointed as Culture Minister a man who, to many French conservatives, represents precisely those values. The fact that Frédéric Mitterrand, the nephew of the former president, was selected despite being openly gay is to Mr Sarkozy's credit (although he was actually chosen because he was a friend of Carla Bruni-Sarkozy and because the capture of any Mitterrand would annoy the left).

Mr Mitterrand's sexual orientation is not something swallowed easily in La France profonde. The furore earlier this month about Mr Mitterrand's book, describing his experiences as a sexual tourist in Thailand, provoked a strange, and rather dangerous, mixture of anger and schadenfreude within the French centre right.

Some of Mr Sarkozy's social and economic choices are also causing confusion and annoyance in his own ranks. His anti-poverty commissioner, Martin Hirsch, another appointment plucked from the left, has pushed through a more generous new system of payments for the long-term unemployed, especially the young unemployed.

This may be justified, but is not what Candidate Sarkozy promised in 2007 when he spoke of abandoning the "welfare culture" and promoting a France which "works harder and earns more".

There has also been bafflement on the right at Mr Sarkozy's conversion to radical eco-causes (a new carbon tax) and his promotion of the idea that GDP should be abandoned as the principle measure of political and economic achievement in favour of an index of national "happiness". Once again, these ideas are not entirely stupid. They do, however, fit uneasily with a President who promised to seek growth with his "teeth" and still promises that he will not increase taxes.

A blistering editorial this week by the right-wing commentator Yves de Kerdrel, in the Sarko-supporting newspaper Le Figaro, accused the President of surrendering to the old centre-left French verities even though France no longer had a coherent centre left. By pandering to the usual pressure groups and permitting "laxity" in state finances, the article suggested, Mr Sarkozy was in danger of becoming another Jacques Chirac.

When these issues are discussed off the record, some UMP parliamentarians place the blame on President Sarkozy's allegedly populist-inclined aides in the Elysée Palace. Some of them blame Carla Bruni. The first lady, a self-proclaimed and unabashed limousine lefty, has muddled Mr Sarkozy's true instincts, they suggest. The arrival of Carla Bruni late in 2007, when the President appeared to be floundering after the collapse of his second marriage, has reshaped Mr Sarkozy in some respects – literally reshaped him.

The first lady devised a diet and fitness programme which made the President look even leaner and hungrier than before. (This was blamed publicly by some of his friends for his collapse, while jogging, in July.) The first lady also devised a crash course of summer studies for a husband whom she regarded as culturally illiterate. Politically, her influence is real, but limited. She has some input on human rights and cultural issues, such as the choice of Frédéric Mitterrand. However, UMP sources say that she should not be blamed for the President's apparent incoherence on economic subjects, which leave Ms Bruni-Sarkozy cold.

In truth, Sarkonomics was always a rather muddled code, taking ideas from left and right, mingling liberalism with protectionism, Anglo-Saxon economic attitudes with classic French dirigisme. After almost two-and-a-half years in power, the contradictions of the Sarkozy approach are beginning to show.

His reforms of universities and pension rights in the public sector were necessary and useful, but far more limited than government, or opposition, propaganda have tried to suggest. Reforms of education and the health service have scarcely started.

Tax concessions to the rich in Mr Sarkozy's first couple of months failed to produce the promised economic boom but plunged state finances even further into the red. (These figures have been conveniently drowned in more red ink by the recession.)

For much of his presidency, these muddles and inconsistencies have been concealed by Mr Sarkozy's energetic, assertive personality. After plunging in the polls in early 2008, he recovered thanks to his strong performance as acting president of the EU last year and his role in co-ordinating global reaction to the recession. In recent days, his approval rating has plunged back down to 39 per cent.

The power of Mr Sarkozy's personality – his refusal to brook contradiction by even his closest friends and allies – has now been revealed as a source of great weakness. None of his ministers or aides had dared to suggest to the President that allowing an inexperienced 23-year-old son to be fast-tracked to the head of La Défense might be seen as an insult in a country which officially worships Egalité. Even Ms Bruni-Sarkozy, UMP sources said, had been unable, or unwilling, to raise this subject with her husband. "On Jean, he has a total blind spot," one UMP deputy explained. "It is the classic syndrome of the divorced father." Jean Sarkozy, and his older brother, Pierre, were toddlers when Nicolas left their mother to live with the future Cécilia Sarkozy in 1988.

Jean was largely brought up by his mother, Marie-Dominique Culioli, part of one of the several, intertwined Corsican business and political clans which have long been influential in Hauts de Seine. "Jean is his father's son," said one political commentator. "But he is also Corsican. Very Corsican." The hundreds of millions of euros in rents and taxes generated by La Défense have long smoothed the path of centre-right politics in Hauts de Seine – and beyond.

Opinions differ on whose idea it was to catapult Jean to the political leadership of the body which will oversee the plans to expand the skyscraper ghetto, and its profits, in the next decade. Some UMP deputies believe that the real driving force in the affair had always been Sarkozy Jnr himself – not necessarily with his father's best interests clearly in mind.

"It is infuriating, and disturbing, that the President cannot see the harm that he is doing to himself," said a UMP deputy before last night's announcement. "You have to remember that Sarkozy was elected as a man who would break down barriers to success in France, the real barriers but also the invisible, psychological barriers."

A large part of the Sarkozy programme has always been to alter the mind of France, just as Margaret Thatcher – consciously or unconsciously – transformed the self-image of Britain. He promised to make France into a can-do, genuinely egalitarian country, not a country run by, and for, a narrow Paris elite. Instead, half way through his term, he is in danger of being seen, even by his supporters, as a hypocrite – an emperor who looks after his own.

Last night, for the first time, France successfully stood up for its own values, against those of Mr Sarkozy. The French Republic 1, The Emperor Nicolas Premier 0.