Schröder quits as head of SDP over reform plans

The German Chancellor, Gerhard Schröder, resigned as leader of Germany's governing Social Democratic Party (SPD) yesterday in an attempt to defuse a mounting crisis within the left-of-centre party over his programme to reform the country's ailing economy.

Mr Schröder's unexpected resignation came as the SPD's popularity appeared to have hit rock bottom, and followed bitter criticism from grassroots party members who had repeatedly accused the Chancellor and his team of being out of touch with them. Mr Schröder told journalists yesterday: "It cannot go on like this."

Mr Schröder nominated Franz Müntefering, the SPD parliamentary group leader, as his replacement to head the party at the national level.

"I am convinced that a division of labour will make it easier to implement our reform programme in future," he said.

Mr Müntefering made what amounted to a candid admission that the party leadership had failed its members: "We Social Democrats do not live in the past. I want to play my part in making sure that the reform process is better explained to both the public and the party."

SPD rebels such as Wolfgang Jüttner, the party leader in Lower Saxony, had earlier compared the Berlin headquarters from which Mr Schröder worked as party leader to "a hermetically sealed spaceship in which the true state of the party is not recognised". He added: "The party has the impression that there is either no plan for the reforms or they are simply not being explained."

Grassroots criticism heaped on the party leadership in Berlin included scathing remarks about the Chancellor's reform programme from Heiko Mass, the left-wing SPD Prime Minister of Sarland state. Mr Mass said: "We have lost the confidence of the people who traditionally vote for us. We cannot keep on penalising pensioners, the unemployed and social security claimants."

In another gesture aimed at placating increasingly disillusioned SPD members, Mr Müntefering announced that Olaf Scholz, the SPD's controversial general secretary, had also resigned.

Under Germany's political system it is rare for a chancellor to be party leader. Mr Schröder was obliged to take on the task in 1999 after the resignation of his left-wing finance minister, Oskar Lafontaine, because of fundamental policy differences.

Mr Schröder has never been regarded as a natural in the job. His nickname, "Comrade of the Bosses", and his widely publicised fondness for expensive Italian suits and Cohiba cigars did little to improve his socialist credentials among rank and file members, although the Chancellor has given up smoking in public.

His resignation came amid a deepening confidence crisis among Social Democratic members and the party's popularity with German voters. Opinion polls published this week suggested that the SPD could expect to win little more than 20 per cent of the vote in a general election, the worst popularity rating for the party since the Second World War.

Party membership of the SPD has haemorrhaged since Mr Schröder took steps to implement his reform programme early last year. Nearly a third of the party's rank and file have handed in their cards during his tenure.

The heart of the problem is the Chancellor's controversial "Agenda 2010" programme, which aims to kick-start Germany's ailing economy and reduce the country's massive problem of 4.5 million unemployed. The measures involved included cuts to welfare, unemployment and pension programmes and trade union rights.

Hundreds of ordinary SPD members have said that the cuts amount to a travesty of the principle of "social justice" and have quit the party.