Jobless figures deal blow to Schröder's re-election hopes

Gerhard Schröder's election hopes were dealt a fresh blow yesterday when official unemployment figures showed that the number of jobless in Germany had stayed above the four million mark for the third consecutive month.

In its last report before the 22 September election, the federal labour office said that unemployment had reached 4,104,000 in August – although the number of jobless in east Germany had dropped by 7,000. The slight improvement in figures for the unemployment-wracked east were in part due to an emergency job creation programme to clear last month's flood damage. Mr Schröder nevertheless claimed they were a "sign of hope".

However, Edmund Stoiber, the conservative Christian Democrats' candidate, lost no time in condemning the figures. "The Schröder government has clearly failed. The Red-Green coalition has broken its most important election promise. We have the highest unemployment figure for August in four years," he said.

Friedrich Merz, the Christian Democrats' parliamentary leader, insisted that the figures spelt defeat for Mr Schröder. "A government responsible for four million unemployed will be voted out of office," he said.

But Mr Stoiber's team was clearly struggling to put unemployment back at the top of the election agenda after their lead in the opinion polls was seriously eroded by Mr Schröder's adept handling of last month's flood crisis and his tough stance on Iraq.

A poll published yesterday by the Forsa research group suggested that the election in just over two weeks time was likely to be one of the closest fought in more than a decade. It showed the conservatives and the Social Democrats (SPD) running neck and neck at 39 per cent, with the conservatives' potential Free Democrat coalition partners holding a 1 per cent advantage over the SPD's Green partners in government.

The increasing likelihood of a war against Iraq has come as an unexpected boost to Mr Schröder. Opinion polls suggest that 84 per cent of Germans are wholly opposed to their troops being involved in such a conflict. The Chancellor has used every opportunity to back the popular mood and has even launched a "Soldiers for Schröder" initiative within the armed forces.

In his most outspoken criticism of American proposals for an attack on Iraq, Mr Schröder reiterated on Wednesday his opposition to the idea, claiming that the Middle East would be "set ablaze" by a war against Saddam Hussein. "Under my leadership, Germany will not be part of an intervention," the Chancellor insisted.

His remarks, which appear perfectly timed to conflict with Tony Blair's support for President Bush, prompted the US ambassador to Berlin to remonstrate with the German government. "Its present policy is isolating Germany from mainstream opinion even within the European Union," Dan Coats, the US envoy, said.

The Iraq crisis has put the conservatives on the defensive. Mr Stoiber has revised his stance on the issue and insisted that if elected, he would give no support to what he described as America's "go-it-alone" policy in the region.

Yesterday he accused Mr Schröder of "extreme arrogance" after the Chancellor declared that he had no plans to discuss Iraq with Mr Bush in person.