GERMANY: Unemployment in Germany reached a two-year high of 4.29 million in January according to new figures, denting Chancellor Schröder's re-election hopes and giving further ammunition to the opposition conservatives. Derek Scally reports from Berlin
The news that over 300,000 people joined dole queues in Germany last month will push unemployment even further up the agenda ahead of next September's general election.
Mr Schröder is haunted by his 1998 campaign promise: "If we don't manage a sizeable reduction in unemployment we don't deserve to be re-elected."
"Gerhard Schroeder has to put all his effort into creating jobs now or, by his own fault, go down in history as the Chancellor of broken promises," said the popular Bild newspaper yesterday.
The figures come a day after an investigation revealed that the state unemployment offices were manipulating figures to increase the apparent number of job placements. Government statistics say every second applicant is placed, but a preliminary investigation said the figure was just one in five.
Rising unemployment will push up social welfare payments and place further strain on Germany's already over-taxed finances, already a source of worry in Brussels. The European Commission believes Germany's growing budget deficit poses a danger to the eurozone economy and has recommended that European finance minister formally warn Germany.
A reprimand would be highly embarrassing for Mr Schröder and would further damage the government's economic record in the run-up to the election. Berlin is now determined to fend off the reprimand with Britain, France and Sweden believed to be prepared to vote with Germany next week and veto the reprimand. Germany's conservative challenger, Mr Edmund Stoiber, called the unemployment figures "scandalous".