German Chancellor Gerhard Schroeder piled pressure on Tuesday on squabbling opposition conservatives not to block his reforms, saying that would kill an approaching recovery in Europe's largest economy.

Schroeder, whose labour market reforms and planned 15.6 billion euros in tax cuts must pass the conservative-controlled upper house of parliament, said the plans were vital to stimulate growth after three years of stagnation.

The opposition would seriously dent the economy if it blocked the plans when they reach the Bundesrat, the upper house, on November 7, he told a gathering of business leaders in Berlin. "It would not just mess up what we have started but would also have enormous negative repercussions for the whole reform process," he said.

"In its role in the upper house, the opposition needs to ensure the measures, which are important for Germany's future, work," he said. "Then we can celebrate Christmas, not before."

Schroeder said he feared wrangling within the opposition Christian Democrats (CDU) and their Bavarian sister party over whether to cooperate with the centre-left government or try to thwart his reform efforts could also hold up the measures.

"Those who have a majority in the Bundesrat also have responsibility to get their own ranks in order," he said.

CDU leader Angela Merkel has urged Hesse state premier Roland Koch, her main rival within the party, to abandon plans to block the reforms and instead to open up to negotiations with Schroeder's Social Democrats-Greens coalition government.

SCHROEDER CAUTIOUS

After passing key reforms in the lower house last week, the government now requires upper house approval for the tax cuts and much of its labour market package, including plans to put pressure on the long-term unemployed to take up available work.

While the opposition is expected to demand wide-reaching changes to most of the reforms, the government hopes Merkel will keep potential "blockers" in check in the Bundesrat where Germany's 16 federal states are represented. The mass-circulation Bild daily reported that Koch faced a barrage of criticism from CDU state leaders on Monday for his stated intention to topple Schroeder at all costs.

Schroeder hopes his "Agenda 2010" package of reforms will slash stubbornly high unemployment, streamline a costly health system and boost consumer spending.

Speaking shortly after Germany's six leading institutes forecast the German economy would grow 1.7 percent in 2004, he said: "I plead that we do everything in our power not just to realise but to exceed the institutes' forecast, and that's not just a matter for the government."

But the institutes said a lasting recovery would depend on the euro not rising too much and denting exports. The BDI industry group was slightly more upbeat, saying a government forecast of two percent growth in 2004 was possible.

Yet the chancellor himself remained cautious.

Referring to his 1.7 percent growth plea, he said: "Looking at the conditions, I am sceptical this is achievable... but after lean years we really need 1.7 percent."

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