The President of the German central bank, Hans Tietmeyer, has urged Bonn to speed up the reform of its welfare and tax systems and likened Germany to a cumbersome oil tanker lagging behind other countries in the race to stay competitive.

Mr Tietmeyer wrote in the Handelsblatt newspaper: "It is more necessary now than ever before to overcome the high level of unemployment and the weakness of investment in Germany soon and in a lasting way."

The structure of Germany's labour costs, the high level of taxes and social contributions and the blockage of reforms were making it hard to achieve a fundamental improvement.

"Cumbersome tanker"

The Bundesbank president said: "Germany still resembles a cumbersome tanker in solving the problems of fiscal and social policy - other European economies like the Netherlands, Denmark or Britain have been more agile in this respect."

But he said there were some signs of improvement, albeit hesitant and late, in labour market regulation and in wages policy. This had boosted the competitiveness of German companies.

Euro must be stable

Mr Tietmeyer said the launch of the euro would bring progress to the European economy provided the new currency was stable.

He said the euro on its own could not solve the problem of unemployment but it would help to promote integration among EU countries and boost Europe's chances of increasing employment.

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