German Chancellor Gerhard Schröder's bid to reform the economy with tax and welfare cuts was in the balance last night as talks with the opposition dragged on with no deal in sight.
Mr Schröder tried to break a deadlock in parliament's mediation committee by joining the talks along with the leaders of the main opposition parties. But his offer of concessions on his tax cut plan met with a cool response from the opposition.
Mr Volker Kauder, chief negotiator for the conservative Christian Democrats (CDU), said: "It's much too early for euphoria. We've reached a decisive stage and one can't say how this is going to develop."
The CDU has blocked the measures, which include a plan to bring forward €15.6 billion ($19.1 billion) of tax cuts to 2004, and is demanding major amendments, not least to score political points.
Last night's talks came after the committee failed to reach a deal in three days of negotiations last week. They mark the culmination of Mr Schröder's nine-month battle to revive the stagnant giant economy with the biggest overhaul of the welfare state in decades.
Failure to agree on the tax cut, which is expected to boost growth by 0.2 or 0.3 per cent, would risk denting the recovery of Europe's largest economy just as it is getting started.
The reforms are also key to Mr Schröder's future. Unpopular though the cuts in jobless benefit and other measures are, failure to get a result in the talks would weaken Mr Schröder and lessen his chances of recovering from an opinion poll slump. - (Reuters)
