German president Horst Koehler has backed the dissolution of the country’s parliament, paving the way for a predicted September election.

The move follows the loss of a confidence vote on July 1st, which German chancellor Gerhard Schroeder deliberately sought so he could seek a fresh popular mandate through new elections.

His Social Democrat party has lost support amid a poorly performing German economy and high unemployment, which currently stands at about 11.3 per cent.

Mr Koehler said: “Our country faces tremendous tasks. In this situation our country needs a government that can follow its goals with steadfastness and resolve.”

Chancellor Schroeder hopes to win a new mandate to push through tough welfare reforms to address the country’s economic problems. But the opposition Christian Democrats, led by Angela Merkel, are well ahead in the polls.

If Ms Merkel, who has been compared to Margaret Thatcher, wins she will be the country’s first female chancellor.