France and Germany drew the battle lines tonight ahead of tomorrow’s G20 meeting, demanding stricter banking regulation than that being proposed by America and Britain, and vowing to speak with a united voice at the summit.

The French president, Nicolas Sarkozy, insisted tighter financial regulation of banks, executive bonuses, hedge funds and offshore tax havens was a “red line” for France and Germany, and rejected US suggestions of further fiscal stimulus packages to pull the world out of its worst economic crisis since the 1930s.

The Franco-German stance, reviving an alliance that dominated Europe in the past, raises the stakes for Gordon Brown and Barack Obama, who earlier played down an apparent rift with their European counterparts. The prime minister had said a deal was just hours away.

“France and Germany will speak with a single voice,” Sarkozy told a joint news conference in London with Angela Merkel, the German chancellor. “Of course we have to make compromises … but compromise has to be engaged in by all regions of the world, especially as the crisis didn’t actually spontaneously erupt in Europe, did it?”

Sarkozy said he was not pointing the finger of blame and he praised Obama and Brown, but he added that Franco-German demands on tighter regulation of financial institutions and bankers’ pay were non-negotiable.

“This has to be a worldwide decision to inject new ethics into trader remuneration,” he said, in a combative tone. “These are our red lines. We are totally prepared to discuss other things so long as these issues are clearly dealt with and solved.”

Asked whether he was ready to walk out of the summit if his demands were not met, he said: “This is nothing to do with ego or temper tantrums, this has to do with whether we are up to the challenges ahead or not.”

Merkel said that France and Germany wanted to see “a new architecture and new regulations for financial markets” spelt out very clearly in the final communique of the summit and insisted the meeting must result in concrete actions, not just talking points.

Sarkozy’s fighting talk contrasted with earlier comments made by Obama and Brown about convergence and consensus between the G20 leaders.

“The separation between various parties involved has been vastly overstated,” Obama said at a joint press conference with the prime minister, adding he expected world leaders to reach an agreement on a blueprint for recovery tomorrow. “All of us here in London have a responsibility to act with a sense of urgency. Make no mistake: we are facing the most severe economic crisis since world war two.”

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