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Merkel, election rival clash on Germany's economic health

German Chancellor Angela Merkel makes a speech in the Bundestag in Berlin on September 3, 2013
German Chancellor Angela Merkel makes a speech during the final session before the elections of the Bundestag, the lower house of Parliament, in Berlin on September 3, 2013. Merkel trumpeted Germany's economic success while her centre-left rival bemoaned

Chancellor Angela Merkel trumpeted Germany's economic success while her centre-left rival bemoaned a growing wealth gap in their last face-off Tuesday before an election less than three weeks away.

Addressing the final session of parliament as the campaign heats up, Merkel and her Social Democratic challenger Peer Steinbrueck painted vastly different pictures of the state of Europe's biggest economy.

While conservative Merkel spoke of her past term as "four good years" with high employment, Steinbrueck said they were "four lost years" as a split in society had grown and left Germany with the largest low-wage sector in Europe.

The clash was their second after a TV debate Sunday, watched by 17 million viewers, in which Steinbrueck sought to invigorate his struggling campaign and close a yawning poll gap behind the popular Merkel.

As the first speaker Tuesday, Merkel said that her second term was marked by "extraordinary challenges" including the world and eurozone financial crises, the Fukushima nuclear disaster, Afghanistan war and the Arab Spring.

"Despite these challenges we can say that, all in all, they were four good years in Germany," she said. "Many people are better off than they were four years ago."

She added that, with a 6.8-percent jobless rate, "we have the highest employment rate we have ever had in Germany, a success that encourages us to continue on this path".

With record tax revenues, she said her government, if re-elected, would aim for a structurally balanced budget next fiscal year and to start paying down its debt by 2015 "for our children and grandchildren".

Posters of the Social Democratic Party candidate Peer Steinbrueck (L) and Angela Merkel in Berlin, September 3, 2013
Posters of the Social Democratic Party's main candidate Peer Steinbrueck (L) and the Christian Democratic Union candidate German Chancellor Angela Merkel pictured side by side in Berlin September 3, 2013.

She warned that the plans of Steinbrueck's Social Democratic Party (SPD) to raise taxes would undo this progress, because it would hurt small and medium sized enterprises that have created many jobs.

The vote on "September 22 will be about nothing less than the question of whether we continue on the path to success or will see severe mistakes that will destroy this successful development," she said.

Steinbrueck painted a very different picture, pointing at a growing wealth gap fuelling social tensions, with a quarter of German workers now in insecure temporary jobs and seven million earning less than 8.50 euros ($11) per hour.

In the eurozone crisis, he accused the Merkel government of "a one-sided focus on hitting countries with the savings club, which doesn't help get them out of their sick bed, or to reduce youth unemployment or regulate banks".

Steinbrueck, who prides himself on his political "straight talk", accused Merkel of making vague promises that are "labels on empty bottles" and said she presided over the "most idle, quarrelsome, backward-looking but outspoken cabinet since reunification" of Germany in 1990.

"Instead of a fresh start there is standstill, instead of a direction we are going around in circles, instead of vigour there is wait-and-see," he said, telling Merkel: "You are the architect of power, but you are not the architect of the country."

Steinbrueck's chances of wresting that power from Merkel, however, remain in doubt, given the chancellor's strong personal approval rating of 54 percent, just over 30 points ahead of his 23 percent before Sunday's TV duel.

In the latest poll, published earlier on Sunday, Merkel's Christian Democratic Union (CDU) and its Bavarian sister party also maintained a strong edge.

The Emnid Institute survey gave Merkel's conservatives 39 percent of the vote and six percent to their junior coalition partner, the pro-business Free Democrats (FDP).

This is a significant lead over the combined total of 23 percent for the SPD and 11 percent for its declared ally the Greens.

A wild-card outcome could see the FDP garner less than five percent, the limit for reentry into parliament, and swings of a few percentage points for the bigger parties before election day.

In this scenario, political observers say, Merkel could be forced to seek a left-right 'grand coalition' with the SPD of the kind she led in her first term.

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