The leader of Germany's ruling Social Democrats (SPD), Mr Franz Münterfering, has called on European leaders to abandon a strict interpretation of the Stability Pact and to concentrate instead on encouraging growth.

Mr Münterfering, SPD chairman since Chancellor Schröder stood down recently, stopped short of calling for the pact to be abandoned entirely. However, he said the EU needs to decide whether it is more important that Germany's new debt fall below three per cent of gross domestic product (GDP) or that it spends three per cent of its GDP on education and research to encourage economic recovery.

"Naturally, it remains correct to run up as little debt as possible," said Mr Münterfering. "However, it seems to me to be a certain discrepancy between the objectives."

Chancellor Schröder yesterday declined to say directly whether he backed the position of the SPD leader. Instead, he called for a "far more serious" and "less superficial" debate about the euro-zone rules.