German Chancellor Gerhard Schroeder has pledged more reforms for 2004 after a gruelling year of election routs and party rebellions over his landmark welfare cuts, but economists doubt he can keep up the pace.
Mr Schroeder's Social Democrats (SPD) ended a two-day brainstorming session yesterday in the eastern town of Weimar aimed at defining their programme for an election-packed year and banishing any impression that they are running out of steam.
Pollsters say a nascent economic recovery could haul the SPD out of an opinion poll slump that plagued it in 2003 when the economy suffered its third year of stagnation, unemployment was stubbornly above four million and the budget deficit soared.
The reforms, a marked rightward shift, upset many in the centre-left party and thousands of members quit last year.
So Mr Schroeder desperately needs to deliver gains in 14 state, local and European elections in 2004 to restore party morale and keep himself in the running for a bid for a third term in 2006.
With so much at stake, analysts doubt he has the stomach for further big changes after a year battling conservatives and left-wing SPD rebels opposed to his "Agenda 2010" of labour and health reforms, benefit cuts and rules allowing easier firing of workers.
His reforms, which also included a tax cut, are a reaction to burgeoning welfare costs resulting from weak growth and an ageing population. Italy and France plan similar measures.
The Agenda 2010 won parliamentary approval just before the Christmas break after opposition conservatives, who control parliament's upper house, won major amendments in marathon talks.
"The government will implement some more mini-reforms that go in the right direction, but are too little and too late," said Joerg Kraemer, an economist at Invesco Asset Management.
Substantial moves such as abolishing massive state subsidies of coal, steel, agriculture, shipyards and public residential construction were unlikely because they would outrage party supporters, said Mr Kraemer.
What Mr Schroeder has announced so far for 2004 seems modest, economists say.
He has made vague pledges about an "innovation offensive" including more government funding of research and development.
He has also called for the introduction of national standards for the regionally fragmented education system, which has scored poorly in international surveys. But his powers are limited as education is the domain of the 16 federal states.
He has proposed setting up new elite universities, an idea that has already met with criticism from left-wingers.
The government is seeking changes to the pension system, including simpler rules for private pensions and steps to counteract funding problems caused by longer life expectancy.
Mr Schroeder has also said he is ready to discuss simplifying the tax system which is so complicated that 60 per cent of the world's tax literature is written in German.
But progress here could be hampered by divisions over tax reform among the opposition.
Pollsters say the SPD is likely to benefit from the upturn in Europe's largest economy, which is starting to fire up again as growth in the United States and Asia increases demand for German machinery and cars.
"The first wave of reforms has been passed and people finally know what to expect. I see the SPD recovering but the question is for how long and how much," said Richard Hilmer, director of the Infratest dimap polling institute.
Elga Bartsch, an economist at Morgan Stanley in London, said the euro's surge against the dollar and the accession of 10 new countries to the European Union in May would exert pressure on German firms to cut costs further.
"The government can't rest on its laurels," she said.