Schroeder talks up German economy

The German Chancellor, Gerhard Schroeder, has sought to play down fears of the country's economy sliding into a recession.

Mr Schroeder told a news conference there would be a clear improvement in the second half of the year, once the effects of the government's tax reform began to be felt.

He said the government wold continue on its chosen path and warned that any changes would have a negative impact on the international markets.

A number of research institutes have recently slashed their growth projections for the German economy.

Inflation is also running at higher levels than predicted.