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EDITIONS
Wednesday, 5 February, 2003, 10:40 GMT
Shock surge in German jobless
Gerhard Schroeder
The news is another blow to Chancellor Schroeder
German unemployment has risen to 11.1%, its highest rate during the government of Chancellor Gerhard Schroeder.

The January unadjusted jobless total of 4.62 million represents a jump of almost 400,000 since December.

The news is the latest blow to Mr Schroeder, whose popularity has been battered by a string of gloomy economic data since he was re-elected in September.

Federal Labour Office president Florian Gerster said the first signs of economic stabilisation had not yet appeared.

Last week, Economics Minister Wolfgang Clement warned that he did not expect unemployment to fall below 4 million this year.

The latest figures leave Germany second only to Spain in terms of European unemployment.

Wrong numbers

The unemployment figures are only the latest in an extraordinary avalanche of economic bad news over the past few weeks.

Jobless figures
Retail sales fell in 2002, recording their worst performance for more than 20 years.

Mr Clement has cut his growth forecast for this year to just 1%, after the 0.2% - Europe's weakest performance - recorded in 2002.

And the budget deficit, which has aroused considerable concern among EU policy makers, shows no signs of abating and is certain to demand controversial tax increases.

Political problems

This prospect, combined with legislative muddle, has cost Mr Schroeder a huge amount of his political popularity.

Over the weekend, his Social Democrat party was humiliated in elections in Hesse and Lower Saxony, his home state.

Political opposition, and his reliance on support from opposition parliamentarians, has meant that his urgent reform programme has made no progress since September.

Before the election, Mr Schroeder promised to reduce unemployment and kickstart growth with a sweeping programme of deregulation.

But influential newspaper Die Welt on Wednesday accused Mr Schroeder of being in hock to the trade unions and traditionalists within his own party.

Euro woes

Trouble in Germany has a knock-on effect on the rest of Europe.

Since Germany accounts for at least one-third of eurozone output, a slump there could have a direct effect on the performance of the euro, and the many countries that rely on German trade, aid and investment.

See also:

03 Feb 03 | Europe
07 Dec 02 | Europe
04 Dec 02 | Business
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06 Aug 02 | Europe
09 Jul 02 | Business
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