EUROPEAN countries were told to unite under a “eurozone president” yesterday, after shock German economic figures triggered fears of a recession that could spread to Britain.

All 17 countries should form an “economic government” led by the head of the EU, German Chancellor Angela Merkel, and French President Nicolas Sarkozy said.

The two powerful European leaders also pushed for balanced budgets across the zone after crunch talks in Paris.

They had met to discuss how to stave off the escalating debt crisis threatening to engulf the region.

However, the talks were almost immediately overshadowed by the announcement that growth in Germany, the backbone of the European economy, tumbled to just 0.1% in the three months to June.

We are looking at real, realistic step-by-step measures that we can use to gain back the trust that has been lost

The figures were a particular blow as Germany has been seen as one of the main drivers of growth within the eurozone.

A struggling Germany could herald future problems for the entire group, already struggling with the massive debts affecting many of its members.

Earlier this month, the European Central bank was forced to buy up billions of pounds worth of Italian and Spanish bonds to avoid potential disaster.

It followed a steep hike in the interest rates both countries were paying, amid concerns that, like Greece and Ireland, they would struggle to pay off the money they owed.

As the talks were getting under way, former Labour prime minister Gordon Brown dramatically stepped into the row, telling European leaders they had to fundamentally reform the eurozone or face its collapse.

However, he did not go as far as Tory Chancellor George Osborne, who has called in recent days for euro bonds to be created to ease the debt crisis.

Mr Brown said the zone had to change the current system in which all 27 member states have to agree on economic solutions.

He said: “Europe’s leaders are handcuffed ... by the problem of getting a coherent response from 27 different nations, and by a rise in anti-European sentiment in their home countries (particularly in Germany), which has deterred them from sanctioning collective action beyond that which protects short-term national self-interest.”

The French and German governments appeared to agree.

Last night they proposed to create a collective eurozone government led by EU President Herman Van Rompuy.

The group would include all the eurozone governments and would meet twice a year.

Chancellor Merkel also called on all eurozone countries to write a requirement for balanced budgets into their constitutions, but stopped short of calls for euro bonds.

“I do not really think we can solve problems with stop-gap solutions,” she said.

“We are looking at real, realistic step-by-step measures that we can use to gain back the trust that has been lost and I do not think that euro bonds would help us in this.”

European leaders are under pressure to increase the markets’ confidence in the eurozone.

Leaders are acutely aware that showing a united political front is crucial.

America lost its presti- gious AAA credit rating last week when it was judged the country did not have the political will to sort out its economic problems.

Economists warn that all European economies are connected, not least because British banks borrow from eurozone banks and can push the costs on to the consumer if interest rates rise.

Ed Balls MP, Labour Shadow Chancellor, said the slowdown in the German economy was a cause for concern.

“The eurozone urgently needs a plan for growth,” he said.

“The managing director of the IMF, Christine Lagarde, is right to say that ‘slamming on the brakes too quickly will hurt the recovery and worsen job prospects’.”