Yet barely a couple of months ago governments on both sides of the Rhine were pursuing ambitious and politically controversial privatisations involving two of continental Europe's biggest state-owned utilities.

In Germany, after years of dithering, Berlin gave the go-ahead for the partial privatisation of the Deutsche Bahn to provide the German railways with the private capital to gear up for the liberalisation of European passenger rail services. In France, Paris set in motion the process of opening up the capital of its state-owned post office company, La Poste, and one of the country's largest employers.

The ensuing credit crunch and financial market meltdown have now put both these partial state sell-offs on hold. Last month, Peer Steinbruck, the German finance minister, pulled the Deutsche Bahn's partial privatisation off the government's agenda. On Sunday, Henri Guaino, one of President Nicolas Sarkozy's closest advisers, said there was no question of opening up the capital of La Poste for the moment given the current market turmoil.

The unions immediately rejoiced, calling it a "great victory" for labour. The Paris government - like Berlin - seems anxious these days to put to one side any politically sensitive issue such as privatisations of cherished public services. But it felt nonetheless obliged to clarify its position.

First, it insisted, there has never been any question of privatising the post office. Second, although the post office is profitable, it still needs funds to finance its development and prepare for European postal service liberalisation in 2011. Third, the post office does not necessarily have to turn to the market to raise the €3bn or so it needs as there are other vehicles that could provide support - the state Caisse des Depots et Consignations for example.

But the unions are still suspicious of the government's intentions and are calling for another national postal strike at the end of this month. The post office itself would clearly like to model itself along the lines of Germany's privatised postal and logistics group that is likely to become one of La Poste's biggest competitors in its domestic market when liberalisation kicks in.

Like the Deutsche Post, the French state group also controls an extensive retail banking network that is particularly solid in these credit crunch days. Although the postal bank is now losing its monopoly in distributing the popular state "livret A" saving accounts, it still commands the lion's share of this flourishing business in these turbulent times. Some politicians and government officials also consider the postal bank could play a useful role in strengthening the French banking system as a whole. It could, for example, forge even closer ties with Société Générale, with which it has a consumer credit partnership. This would help SocGen enlarge its retail banking base while providing the postal bank with SocGen's capital markets and investment banking expertise. This is what has happened in Germany where Deutsche Bank has taken a core 29.75 per cent stake in the Postbank - a move both designed to strengthen Deutsche Bank's domestic retail base as well as keeping Spain's Santander out of the German banking game.

Mitterrand's legacy

For France, privatisation has always been a more complex affair than in many other European countries. The late Socialist President François Mitterrand originally nationalised the banks and the industrial giants back in 1981. However, this was essentially a cynical political move to keep the then powerful Communist Party on board and financial and economic considerations were essentially secondary.

The subsequent denationalisation process, which began in the late 1980s, was driven this time by hard financial logic. This produced a not altogether happy regrouping of private sector companies, leaving the CAC40 blue-chip index dominated by large financial and industrial conglomerates.

If the French banks claim their universal banking model has helped them weather the storm better than many rivals, this is not the case of industrial conglomerates. Their shares have fluctuated on market sentiment wavering between two possible outcomes. First, that they could be taken over and broken up. This has been the case with Pechiney and Arcelor. The second option is that they would be forced to sell some of their parts to become more coherent entities - for example, Alstom's decision to shed its shipbuilding activities or Bouygues move to exit the water utility business.

This may go some way in explaining President Nicolas Sarkozy's decision to set up alongside the existing Caisse des Depots et Consignation a second French sovereign wealth fund to protect national interests.