Germany’s Chancellor Gerhard Schroeder kicked off the Social Democrats’ campaign yesterday, seven weeks before early national elections.While Schroeder defended his government’s highly controversial economic reforms, he attacked the opposition conservatives who are proposing a rise in value added tax from 16 to 18 per cent. “We don’t have to do it,” he said, “because we haven’t done so in the past. We made changes right across the tax system. They were effective for companies and for household budgets as well.” Schroeder announced his plan to bring forward the elections in May, after the SPD suffered a crushing electoral defeat in the key industrial state of North Rhine-Westphalia – previously a party stronghold. The woman who is favourite to become the next Chancellor, Angela Merkel, was also in Bavaria on Saturday. She was attending a rally alongside Edmund Stoiber, head of the CSU, regional partner of Merkel’s Christian Democratic Union. Merkel told 600 supporters: “We have to take the difficult route- increasing VAT- because we have to achieve our aim to ‘make way for employment.’ We have to reduce work-related costs and we will do so in this way.” Recent opinion polls suggest that the conservatives’ lead has slipped and thatmost voters in fact favour a grand coalition of the Social Democrats and the CDU-CSU.