SPD adopts new economic policy friendly to business

Germany's Social Democrats (SPD) approved a new, business-friendly economic policy yesterday in an attempt to win over wavering voters in time for next year's general election. The policy was proposed by Mr Gerhard Schroeder, the prime minister of Lower Saxony, at the party's annual conference in the northern German city of Hanover.

Mr Schroeder hopes to become his party's candidate to challenge Dr Helmut Kohl next year. His speech yesterday was in stark contrast to that of his rival, the party chairman, Mr Oskar Lafontaine, on Tuesday.

Where Mr Lafontaine, one of the most gifted orators in German politics, delighted delegates with a call to return to the traditional values of social democracy, Mr Schroeder urged them to embrace modernity. Flexible work practices, not state intervention, was the key to reducing Germany's record unemployment, Mr Schroeder said.

He called on Social Democrats to look towards Britain and the US for inspiration on how to combine tradition with modernity and to embrace innovation and progress. Although Mr Lafontaine had praised the achievements of the EU and called for greater innovation, Mr Schroeder made no mention of Europe whatsoever.

As party chairman, Mr Lafontaine ought to be the automatic choice to challenge the chancellor, not least because of his remarkable success in uniting the party during the past two years. But he is unpopular with voters and was defeated by Dr Kohl in 1990.

Mr Schroeder is the man most feared by the Christian Democrats, on account of his appeal to conservative voters. Like President Clinton and the British Prime Minister, Mr Tony Blair, he has successfully distanced himself from his party. Every time he clashes with fellow Social Democrats he increases his popularity with the public.

Mr Schroeder told delegates yesterday that, if the SPD loses next year's election, members have only themselves to blame. After 15 years in the political wilderness, the party is determined to take no risks between now and September 1998.

Lower Saxony goes to the polls in March and, if Mr Schroeder's vote falls by more than 2 per cent, he has promised not to put his name forward as candidate for chancellor.

If he performs well, many Social Democrats might calculate that, despite their reservations about his links with big business and his disregard for left-wing pieties, Mr Schroeder represents their best chance of bringing the Kohl era to an end.