It was billed as his blood, sweat and tears speech, a wake-up call to Germany and its people.

And observers say Chancellor Gerhard Schröder's performance on Wednesday during the parliamentary budget debate for 2003 was a return to form and a much-needed boost for his party, the Social Democrats.

In the face of a seemingly never-ending stream of gloomy economic news, accusations by the conservative opposition of deceiving the electorate about the state of the economy, and plummeting popularity rates, Schröder chose to keep a low profile.

Schröder attacks

Earlier this week, under pressure from detractors within his own party to confront the public with a coherent stance on Germany's economic problems, Schröder announced that he would use the budgetary debate in parliament to address the issues.

Following the opening speech by Michael Glos, the parliamentary leader of the opposition Christian Social Union, who accused the government of complete failure with its economic policies, Schröder launched a series of fierce attacks on the opposition.

He said the opposition conservatives were unsurpassable in their lack of content. There was no sign, he said, of viable proposals to solve the country's problems. He talked of personal defamation and called on Angela Merkel, leader of the Christian Democratic Union, to "call back the political agitators within her ranks."

More reforms

Schröder conceded that the economic situation in Germany was worse than expected at the beginning of the year. "There is no doubt that we are experiencing economic problems," he said, but stressed that the downturn was due to the global economic climate.

Backing his Finance Minister Hans Eichel, who on Tuesday announced further cuts into the welfare system, Schröder said further social reforms were needed, especially in the pension system, where contribution rates for employers and employees are set to rise to 19.5 percent from 19.1 percent.

Schröder also called on the opposition to work constructively with his government. His coalition of Social Democrats and Greens face a conservative majority in the upper legislative chamber of parliament, the Bundesrat, where CDU and CSU have the power to block the passage of labor market reforms proposed by the government.

Lack of leadership

CDU leader Merkel accused Schröder of lacking in leadership. His policies, she said, were damaging Germany's prospects of an economic recovery. "You are not shaping policies," she said.

She said it was representative of Schröder's stance that he did not mention the latest rise in German unemployment.

More gloom

Indeed, the data released by the Federal Labor Office paints a gloomy picture. It shows that the number of jobless rose to its highest November level in five years climbing above the psychologically sensitive 4-million mark. The seasonally adjusted figure rose by 35,000 from October to 4.161 million

Disastrous opinion poll figures are piling on the pressure even more. The latest survey shows that the Social Democrats would only gain 27 percent of the vote if elections were held this Sunday, a loss of 11.5 percentage points compared to September's general election. The Union parties meanwhile would win 50 percent.