Germany has once again shot down French proposals for jointly issued euro bonds to help the 17-member currency union out of its current financial crisis.
The deadlock emerged after a meeting between French Finance Minister Pierre Moscovici and his German counterpart Wolfgang Schaeuble in Berlin on Monday.
The latest rebuff will only heighten the tension between newly elected French President Francois Holande and German Chancellor Angela Merkel, who was cajoled into signing up to a joint statement promising to mix austerity with growth measures at this weekend's G8 Summit.
Hollande and Merkel have been on a collision course over how to tackle the growing European sovereign debt crisis, with the French premier championing growth strategies over the German-led 'fiscalpakt' of cuts and tax hikes.
Speaking after the Berlin meeting, Moscovici said: "Our discussion did not move beyond the old German and French positions."
The leaders will try and resolve their differences at an informal dinner in Brussels on Wednesday.
Germany is opposed to the introduction of euro bonds, a financial instrument Hollande hopes would raise enough money to finance job creation initiatives across the continent.
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