Nicolas Sarkozy has watered down his plans to set up a union of Mediterranean states, instead agreeing with his German counterpart to revitalise an existing European Union initiative.

Speaking after a dinner with Angela Merkel, the ­German chancellor, in Hanover on Monday night, the French president said his project would now involve all 27 EU member states and would be embedded in the Barcelona Process – a framework of political and economic agreements between the EU and 10 states around the Mediterranean launched in 1995.