French president says Britain 'has no industry left', while German chancellor Angela Merkel pledges to help Sarkozy on the campaign trail

The French president, Nicolas Sarkozy, has reignited his cross-Channel war of words by accusing the UK of "having no industry left" during a primetime broadcast on national television.

Sarkozy, biding for re-election this spring, but trailing in the polls behind the socialist challenger François Hollande, was outlining his plans for raising VAT on Sunday night when a journalist pointed out that a similar move in the UK had seen a rise in inflation and had set back the economy.

"The UK has no industry any more," Sarkozy said in a response that recalled recent outbursts by his finance minister, François Baroin, and the Bank of France governor, Christian Noyer, that Britain should have had its credit rating downgraded before France because the UK had a weaker economy and higher deficit.

Tensions between Paris and London fell to a nadir after David Cameron used his veto at December's crunch EU summit but government sources sought to play down the latest remarks. One British source said: "It is not true. The percentage of GDP that is manufacturing is 11%, the same as in France. He has got an election."

As Cameron arrived in Brussels on Monday he told Europe's politicians they needed to "get really serious" about promoting jobs and growth in the EU. "We need to complete the single market, agree trade deals and make serious efforts to deregulate small businesses," he said.

In a further sign Sarkozy is facing a desperate fight to stay in power, it has emerged that Angela Merkel has pledged to help him on the campaign trail. Hermann Gröhe, general secretary of Merkel's Christian Democratic Union (CDU), confirmed at the weekend that she would "actively support Nicolas Sarkozy with joint appearances in the election campaign in the spring".

While it is not uncommon for certain world leaders to campaign on behalf of friends in neighbouring countries – Vladimir Putin has often vigorously supported candidates in former Soviet states – European politicians tend not to interfere with elections elsewhere.

They may support each other on certain issues – former German chancellor Helmut Kohl famously appeared on French TV alongside François Mitterand ahead of a referendum on France joining the euro – but to board the battle buses and speak at rallies was a new step, said Ulrike Guérot, an expert on Franco-German relations at the European Council on Foreign Relations. It was likely to become more common, she said, as European leaders build a "transnational democracy".

Anke Hassel, professor of public policy at the Berlin-based Hertie School of Governance, said it was very unusual for a serving European leader to campaign for an international colleague's re-election. She too believes such cross-border support could become commonplace. "I think we are in a profound period of change. Things are really being stirred up with the signing of the new fiscal treaty. This is the first step towards a much deeper integration on the political side of things."

The strength of the endorsement is surprising for more personal reasons. Though the French and German leaders have got along better as the euro crisis bites deeper, the pair are far from best of friends. At a gala in Frankfurt before Christmas marking the departure of the head of the European Central Bank, Jean-Claude Trichet, Sarkozy allegedly made rude remarks about Merkel's fondness for cheese.

Merkel's surprise announcement caught Paris on the back foot as Sarkozy, also of the centre-right, has yet to officially declare his candidacy for the election, which will take place over two rounds on 22 April and 6 May.

"I did not know she voted in France," the French presidentsaid in an interview with multiple television channels on Sunday evening. Hassel, however, said she did not believe Merkel would have endorsed Sarkozy without his agreement.

Meanwhile, Hollande will seek to reassure the City on a visit to London next month after being accused of "political vindictiveness" towards Britain's financial heart. The Socialist party candidate will begin a cross-Channel charm offensive aimed at calming growing tensions and re-establishing the entente cordiale amid accusations that he has it in for Britain's banks and financial institutions.

The 24-hour visit is pencilled in for late February and although details have not yet been finalised, Hollande's advisers say he will "almost certainly" meet Ed Miliband and that would hope to talk to David Cameron.

"François Hollande is certainly not the bogeyman who has the City of London in his sights," a member of his campaign team said.

"I suspect this is some chicanery from the right to misconstrue his proposals, because there is no anti-City crusade in what he is proposing. He has said he wants financial institutions to be better regulated, but he is only saying what others, including Barack Obama and the Financial Times are saying … that having saved the banks in 2008 they should not be speculating on countries and stopping them from getting back on their feet."

The adviser, who did not wish to be named, added: "The world of finance has to go back to its primary role, which should be to finance the real economy and not speculate. Even some great capitalists and fans of the free market agree with this."

At an election meeting of Sarkozy's UMP party in Paris at the weekend, Gröhe is said to have declared that the CDU was convinced Sarkozy "is the right man in the Elysée, now and in the future", the Süddeutsche Zeitung reported. "We need a strong France with a strong president in charge. That person is our friend Nicolas Sarkozy," said Gröhe.

He criticised Sarkozy's presidential rival, the socialist François Hollande, who before Christmas travelled to Germany before Christmas to offer comradely support to the Social Democratic Party (SPD), the Merkel's main domestic rival.

"The Socialists are stuck in their dreams of the past. All they are doing is bringing out dusty concepts and wealth distribution fantasies from their moth-ridden policy cupboard," said Gröhe. None of Hollande's "hitherto vague pronouncements" had not offered a solution to the "pressing problems of our time", he added