It is always a shock to be reminded of the deep-seated hostility between the French and English. Lately, the bitterness has surfaced in a nasty fight over the British contribution to the Common Market budget -- at precisely the worst time to have a major crisis in the European community.

But the ill feeling is there. A highly educated, sophisticated member of the "establishment" here is not above recalling that every 6-year-old in France is taught -- whether it is true or not -- that the British burned Joan of Arc.

What has dealt the latest blow to European unity is Prime Minister Margaret Thatcher's insistence that as one of the poorer members of the Common Market, Britain is getting a bum deal by being forced to make a contribution to the Common Market budget disproportionate to the size of its economy.

She had the nerve, good sources say, to walk into a top-level Common Market meeting and say: "I want my money back." That stunned French President Valery Giscard d'Estaing, West German Chancellor Helmut Schmidt and the rest of the Common Market powers.

THE MONEY Thatcher "wants back" amounts to the equivalent of some $2 billion this year. Under the complicated EEC accounting system, Britain gets hit -- through tariffs, levies and its share of value-added taxes -- because it buys more than the others outside the market. (The British public rather likes the idea that Britain still buys many items from Commonwealth countries -- for example, food from New Zealand.)

Britain also does not put up as much farm subsidy money as do other members, notably France and West Germany. In effect, Thatcher -- as she promised she would during her election campaign -- is complaining that the Brits pick up too big a bill for continental farm supports.

A French official tells me that Thatcher not only "simplistically" demanded her money back, but needled Giscard and Schmidt by saying: "If you give me what I'm asking for, I'll put it in my pocket and come back for more."

Giscard said firmly there would be no money given back. But in consideration of Britain's weak economic position, he agreed to a compromise proposal put forward by Schmidt:

For 1980 only, the British bill would be trimmed to the actual 1978-79 average, or to the equivalent of about $650 million, with the prospect that a similar reduction could be made in 1981. This sounded generous enough, but Mrs. Thatcher, looking down the road to the next election campaign, wanted the cut made permanent -- or at least until she gets through the next election, perhaps in 1984. The outraged continental powers have so far said "no," and have retreated to see how next to deal with the tough lady from London.

EVEN IF THE issue is somehow papered over, there is a conviction here that the British conception of what the community is all about remains far different from that on the continent.

"They don't really think of themselves as part of Europe, and to be fair about it, they are not," says a Frenchman. "(Britain) is an island, not really part of the continent, and that's the way it's always going to be."

In essence, the French complain, the British have never seen the EEC as more than a free-trade area which could strengthen the Atlantic community (including the United States). The continental approach is to stress the complete integration of Europe in all economic and political aspects -- and the others suspect that the British don't really want to be part of that. Significantly, the British shun the European monetary system.

Economically, Britain has fallen behind other major continental powers. In 1963, the British GNP was 25 percent greater than that of France. Then years later, the positions were reversed. Now, the latest Organization of Economic Cooperation and Development figures for the current fiscal year project a French per capita GNP of $8,850 -- or 60 percent higher than the U.K.'s $5,530.

Britain's Common Market partners think Thatcher is risking the whole ball game by demanding, in effect, a third renegotiation of the terms of membership.

The French argue, with a tone of bitterness, that North Sea oil is pumping $7 billion to $8 billion a year into British coffers, so that Thatcher can really afford the $2 billion community budget bite.

To be sure, the envy over the North Sea oil bonanza comes through -- mixed with frustration over inability to cope with a stubborn Englishwoman.