Hmm that doesn't sound great. Maybe you just need to talk about long term goals for the DC overall and shelve the specifics a bit. If you have time. It doesn't seem impossible to incorporate both of your wishes.
TBH her teaching them phonics would be a total waste of time. It doesn't benefit children to learn phonics early, because if they are that way inclined they will just pick it up faster when it comes to it, and you risk putting them off it if they find it more challenging. It can be fun for them to learn early but it's really of no educational benefit because it's not like they tend to read to glean information under about 7 years old anyway.
Selective schools are later aren't they, 10 or 11 kind of age? By that point their English will have caught up with their peers anyway. Their English will always be dominant as it's the language of the country they are living in and it's your and DH's first language. I don't think that lagging English is something you need to worry about unless the selective school intake is happening before 5 years old - is it? (I don't really know how these things work.)
I would have thought that bilingualism in a European language would be considered a good point for selective schools. Germany's economy is actually doing very well and there are a lot of businesses based there - STEM for example is expanding rapidly in Germany. If that is an area you see your DC working in (which I appreciate is a bit bonkers to be thinking so early, but it does sound like you might be) then German would be a very useful language to know, certainly more relevant than French IMO. I think French is considered a but outdated as a business language these days. Spanish would probably be useful but I don't think German is a terrible choice. Plus (as said) having the foundations of a second language, even without fluency, helps them learn other languages, as it's not really possible to predict what will be relevant 15, 20, 30 years in the future.
(I do think that language skills will be massively in demand, though, and may well give DC the edge in careers over the next few decades.)