Germany's Ifo economic institute has said unemployment will continue to rise in the months ahead and that the Chancellor, Mr Gerhard Schroder, will probably fail to meet his target of cutting the jobless totals by 2002.
Mr Willi Leibfritz, Ifo's chief economist, said the number of Germans out of work would probably total 100,000 more in October than a year earlier. "The goal of reducing the number of employed to well below 3.5 million by the autumn of 2002 will probably not be reached," Mr Leibfritz said, referring to Mr Schroder's election promise.
The number of people without work in Europe's largest economy has climbed steadily for six months in a row after falling for the first two years of Mr Schroder's term. It reached 3.85 million in June.
The closely watched unemployment rate, 8.9 per cent in June, is now only slightly below the 10 per cent levels Mr Schroder inherited when he took office.
Mr Leibfritz renewed his call for the European Central Bank to lower interest rates. He also said Mr Schroder's government would make a big mistake if it stuck too rigidly to its budget consolidation in face of slowing economic growth.
"The government should not make the mistake of tightening its consolidation even further on account of the reduced tax revenues because of the slowing economy," he said.
