The EU Presidency, which France took on for six months from yesterday, poses a big challenge to 'Sarkonomics'.

Will President Nicolas Sarkozy try to stamp his brand of state economic oversight, trade protection and promoting European industrial champions on the 27-nation bloc?

Or will the responsibility of EU leadership help him embrace a free trade agreement, liberalise France's rigid economy and cut its budget deficit?

Paris has not placed economics in its top four priorities, which are an EU agreement on climate change and energy policy, a charter on migration, closer European defence cooperation and a modest updating of the common agricultural policy.

But rising inflation, sagging consumer confidence, an uncomfortably strong euro currency and a deteriorating business outlook seem certain to thrust the economy on to the agenda.

Three key issues will put Mr Sarkozy's economic principles to the test: A possible world trade agreement; the response to soaring oil and food prices; and the relationship between EU governments and the European Central Bank.

Long-stalled negotiations in the World Trade Organisation come to a crunch in late this month when trade ministers meet in Geneva for what looks like the last chance to forge a deal before the end of US President George W. Bush's term.

An agreement could give the world economy, battered by the credit crisis, commodity inflation and a US economic slowdown, a much needed injection of confidence. An acrimonious failure could push it further over the cliff.

The executive European Commission negotiates on behalf of EU member states in the WTO, but France has tried to handcuff Trade Commissioner Peter Mandelson to deter him from making any more concessions in agriculture, seen as a vital French interest.

Mr Sarkozy has said Mr Mandelson was partially to blame for Ireland's June 12 "No" vote to the EU's reform treaty and lambasted his handling of the trade talks.

Paris has called a special meeting of EU foreign ministers in the week before the WTO ministerial session opens on July 21.

EU trade officials, whose positions bar them from speaking publicly, say they expect the French to be breathing down Mr Mandelson's neck in Geneva.