The 90-minute duel, screened simultaneously on four channels, was seen as Mr Schröder's last opportunity to give his ailing Social Democrats at least a chance of swinging the vote in their favour in elections in two weeks.
Calling on voters to back his polices of "socially just" economic reforms, a confident Mr Schröder attacked Ms Merkel's plans to raise the German equivalent of VAT and introduce a 25 per cent flat rate income tax.
"This is trying to treat people like guinea pigs," Mr Schröder said. "These ideas cannot be taken seriously," he added, insisting that during his tenure Germany had become a "world champion" exporting nation.
But Ms Merkel hit back with charges that Mr Schröder had cheated the electorate with promises to reduce German unemployment. "There are now five million unemployed in this country. We are losing 1,000 jobs each day. Your government has found no answer to this problem."
Despite Ms Merkel's lacklustre television style, her opposition Christian Democrats have maintained a virtually unassailable 10 per cent lead in the opinion polls since May, placing her firmly in line to become Germany's first female chancellor after 18 September.
Yesterday, only hours before the debate, Ms Merkel said she relished the prospect of a confrontation with Mr Schröder: "It is a huge chance. I am firmly convinced that people will not fail to notice the gap that exists between Mr Schröder and his own party," she said.
Mr Schröder, who hoped to sway the more than 25 per cent of Germans who have not yet decided whom they will vote for, was the favourite to win the debate. His experience as Chancellor and proven television ability have won him the nickname "the media Chancellor".
By contrast, Ms Merkel's reputation is that of a competent but rather wooden television performer. "She is the most improbable element in German politics,"Der Spiegel magazine commented. "In a media-dominated democracy, there should not be a candidate like Angela Merkel."
The differences between the two candidates were underscored by Ms Merkel's admission that she had hired a leading television journalist to coach her for last night's debate, and her refusal to take part in a second duel proposed by Mr Schröder. The Chancellor dismissed suggestions that he needed training.
Despite Ms Merkel's perceived shortcomings, opinion polls suggested that she was benefiting from her party's attempts to market her as an "Honest Angie" figure, whom voters could trust more than Mr Schröder. One survey showed that while a majority thought Mr Schröder was a more competent politician, a majority considered Ms Merkel more trustworthy.
Mr Schröder launched the final phase of his campaign last week by branding his opponents as " cold, inhuman and egotistical". He insisted they would destroy the social consensus built up in post-war Germany by forcing through neo-liberal policies.
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