Merkel looks forward to better days after big week

BERLIN, Nov 5 (Reuters) German Chancellor Angela Merkel acknowledged this weekend the public's faith in her government had slipped, but a string of domestic policy successes last week may point to better times ahead.

Although poll ratings for her government fell to new lows earlier in the week, by the end of it, unemployment had dropped to a 4-year low, borrowing had been cut, and two troubled financial policy objectives moved close to being realised.

Merkel told today's edition of the Bild am Sonntag newspaper she could see better times on the horizon.

''If we continue to work with a sense of purpose and without making false promises, we can win back trust that has been lost,'' she said. ''There's a good chance for all of us that Germany will soon be in a better position and will be a locomotive for Europe.'' A Forsa poll on November 1 found a mere 28 per cent of Germans would vote for Merkel's conservatives, while just 29 per cent would back her Social Democrat (SPD) coalition partners.

It was the first time since last year's parliamentary election that both parties had sunk below 30 per cent in ratings.

After winning praise in Germany for a strong start in office dominated by foreign policy, Merkel has seen her popularity sink during coalition infighting and a struggle to agree changes to the country's stretched healthcare system.

Dissatisfaction within the coalition has exposed Merkel to sniping from both opponents and rivals within her party.

Yesterday, Christian Wulff, the conservative state premier of Lower Saxony, seen by many as a leading rival to Merkel, said the latest poll results posed a danger to democracy.

''We need a Juergen Klinsmann for German politics,'' he told the Neue Presse daily, referring to the ex-coach of the German soccer team, who was credited with inspiring a wave of optimism in the country when it hosted the World Cup this summer.

Nevertheless, data on Thursday showed unemployment fell in October by three times the amount expected, taking the headline jobless rate below 10 per cent for the first time in 4 years.

The next day, the government said buoyant tax revenues, spurred by the strongest growth in six years, would help Germany cut mandatory labour costs and reduce new borrowing in 2007 to its lowest level since reunification in 1990.

Also this week, a government working group said it had finalised a plan for reducing company taxation, while the cabinet approved a hotly debated draft law that will allow the creation of real estate investment trusts in Germany.

Next year will see Merkel returning to the global stage as Germany assumes the presidency of both the European Union and the Group of Eight (G8) leading industrialised nations.

In an editorial, Bild am Sonntag said last week was the best Merkel had enjoyed domestically since she took office, and one her predecessor Gerhard Schroeder would have been proud of.

Reuters SBA VP0202