Never before has a 23-year-old student's announcement that he's withdrawing a job application caused such astonishment and relief. Last week Jean Sark­ozy, the son of the French president, abandoned his dream of taking over the political leadership of the La Défense skyscraper park just west of Paris.

The announcement on television news, brought to an end a battle of political wills which appeared, in recent days, to have pitted the Sarkozy clan against almost the whole of France, from the press and public to the president's own party and prime minister.

The tangled and absurd affair of the fast-track political ambitions of "Prince Jean" has – along with a series of other mis-steps, accidents and embarrassments – shaken the trust of the French people in their hyperactive, can-do president. Last week's u-turn, although elegantly handled by the younger Sarkozy, may have come too late to repair the damage.

Asked if the head of state had played a part in the decision, Jean Sarkozy told the France 2 nightly news: "If you're asking me if I've spoken to the president, the answer is no. If you're asking me if I've spoken to my father, the answer is yes."

Nicolas Sarkozy reaches the halfway point of his five-year presidency in a couple of weeks. There is no serious alternative to him, either on the left or within his own political family, the centre right. His handling of the global recession has been reasonably sure-footed at home and influential abroad. His much-trumpeted programme of reforms has proved incremental and cautious, rather than revolutionary, but far from pointless.

Nonetheless, with half of his mandate still to run, Sarkozy's carefully constructed public image as a "different" kind of French politician – a man who governs in the interest of ordinary people, not elites or special interests; a man who understands the reality of life for "people who rise early" – is in danger.

The Hauts de Seine council west of Paris, dominated by the president's cronies, had been due today to rubber-stamp Jean Sark­ozy's bid to become the political leader of the body which manages La Défense, the biggest single-office development in Europe. Until last night any suggestion this was a bad idea in a republic which (in theory) guillotined inherited, aristocratic privileges more than 200 years ago had been dismissed by the elder Sarkozy as an ignoble attack on his family.

Jean is the second son of the president's first, of three, marriages. He is repeating, for the second time, his second year as a law student. The president insisted Jean's meteoric rise, to become the centre-right leader on the Hauts de Seine council last year and to covet the leadership of La Défense, could be explained entirely by due, democratic process and his son's extraordinary abilities.

In a country where young people struggle to find jobs and, if employed, struggle to be taken seriously, the clamour of angry protest grew and grew. Under increasing pressure from within his own camp, the president was forced last week into a humiliating public climbdown.

Last week also saw the end of the Clear­stream trial in which the former prime minister Dominique de Villepin was accused of spreading lies to destroy Nicolas Sarkozy's rise to the presidency in 2004. Whatever the rights and wrongs of the affair, Clearstream has also become a trial of the narcissistic style, and questionable political judgement, of the president. After doing everything possible to ensure the prosecution of Villepin went ahead, Sarkozy referred to his former colleague on TV, just before the hearings began three weeks ago, as a "guilty man". He later "regretted" making any comment on the trial but declined to withdraw or apologise.

"The present style of government in France is closer to Putin than De Gaulle"; "The cult of personality around Sarkozy... the centralisation of power are taking us towards a Stalinism of the right"; "As far as I am concerned, a page has been turned. I can no longer support, directly or indirectly, such an abuse of power." These comments (and many similar ones) are from an online forum conducted by France's most respected newspaper, Le Monde. The contributors are not long-time Sarkozy-baiters on the left or far right. All claim to be once-enthusiastic members of Sarkozy's Union pour un Mouvement Populaire (UMP).

Many of the parliamentarians representing the UMP have been in an off-the-record revolt against Sarkozy – on Prince Jean and other issues – for days. Even the long-suffering prime minister, François Fillon, was said to have been considering whether he could continue in the government. Officially, Fillon is fully behind Sarkozy. Privately, according to the investigative newspaper Le Canard Enchainé, Fillon spoke of the Jean Sarkozy affair as an "enormous mistake... one that gives a catastrophic image of Nicolas Sarkozy at home and abroad".

As Fillon points out (according to Le Canard), the timing of the saga of Prince Jean made it doubly and triply devastating. Although France did not fall as rapidly and as deeply into recession as Britain, the economic suffering is still spreading and could last longer. At the same time, Sarkozy's troops on the centre right are beginning to question the direction in which their "hyper-president" is leading the country.

After promising to rid France of the allegedly effete values of a post-1968, lefty-liberal political "elite", Sarkozy recently appointed as culture minister, a man who, to many French conservatives, represents precisely those values. The fact Frédéric Mitterrand, nephew of the former president, was selected despite being openly gay is to Sarkozy's credit. (Although he was chosen because he was a friend of Carla Bruni and because the capture of any Mitterrand would annoy the left.)

Mitterrand's sexual orientation is not something easily accepted in La France profonde. The furore earlier this month about Mitterrand's book, describing his experiences as a sexual tourist in Thailand, provoked a strange and rather dangerous mixture of anger and schadenfreude in the French centre right.

Some of Sarkozy's social and economic choices are also causing confusion and annoyance in his own ranks. His anti-poverty commissioner Martin Hirsch, another appoint­ment plucked from the left, has pushed through a more generous system of payments for the long-term unemployed, especially the young. This may be justified, but is not what Sarkozy promised in 2007 when he spoke of abandoning the "welfare culture" and promot­ing a France which "works harder and earns more".

There has also been bafflement on the right at Sarkozy's conversion to radical eco-causes and his promotion of the idea that GDP should be abandoned as the principle measure of political and economic achievement in favour of an index of national "happiness". Once again, these ideas are not entirely stupid. But they fit uneasily with a president who promised to seek growth with his "teeth" and still promises he will not increase taxes.

A blistering editorial this week by the right-wing commentator Yves de Kerdrel, in the Sarko-supporting newspaper Le Figaro, accused the president of surrendering to the old centre-left French verities even though France no longer had a coherent centre left. By pandering to the usual pressure groups and permitting "laxity" in state finances, the article suggested, Sarkozy was in danger of becoming another Jacques Chirac.

Off the record, some UMP parliamentarians blame Sarkozy's allegedly populist-inclined aides in the Elysée Palace. Some of them blame Carla Bruni: the self-proclaimed and unabashed limousine lefty has muddled Sarkozy's true instincts, they suggest.

In truth, Sarkonomics was always a muddled code, taking ideas from left and right, a mingling of liberalism with protectionism, Anglo-Saxon economic attitudes with classic French dirigisme. The contradictions of the Sarkozy approach are beginning to show and last week his approval rating had plunged back down to 39%.

A large part of the Sarkozy programme has always been to alter the mind of France, just as Margaret Thatcher transformed the self-image of Britain. He promised to make France into a can-do, genuinely egalitarian country, not one run by, and for, a narrow Paris elite. Instead, halfway through his term, he is in danger of being seen, even by supporters, as a hypocrite – an emperor who looks after his own.

Last week, France stood up for its own values, against those of Sarkozy. French Republic 1, Emperor Nicolas Premier 0.