FACING the television camera alone with no props and a background of unadorned white, Gerhard Schröder has been doing his bunker pitch to keep himself in power as Germany’s chancellor and “Saviour of the Nation”.

Fighting on the home front has proved a highly successful tactic. Once seen as the “business-friendly chancellor”, he is now the defender of Germany’s treasured social-market economy and slayer of global dragons and ravenous free-market “locusts” — namely foreign companies bent on enslaving the citizenry in the chains of unemployment to benefit shareholders.

Nobody should be surprised at the Schröder comeback.

The conservative opposition may have overplayed its hand, believing Germans were up for Thatcherite-style reforms. Are voters really prepared to accept a two percentage point increase in Vat and the abolition of a raft of tax allowances? Or are they waking up to the fact that the conservative leader Angela Merkel is offering exactly what Schröder promised in 1998 — jam tomorrow, reforms without pain? Either way, business is on tenterhooks over the outcome next Sunday.

More of Schröder could cost companies dear in a further loss of overseas confidence in Germany’s appetite for swift change. But Merkel’s tax changes would cost them an extra €7 billion (£4.7 billion) in lost liquidity, say German economists at the Instituts der deutschen Wirtschaft (IW). And the DIW (Deutsche Institut für Wirtschaftsforschung) has labelled the Merkel reforms as “inefficient and unfair”.

Schröder has struck a chord with voters, who have seen jobs disappear in the pursuit of shareholder value.

“In my constituency, an American firm announced it was closing a factory and moving production to eastern Europe. Hundreds of jobs have been lost,” said Oswald Metzger, a Green party politician. He points to a study by the American Chamber of Commerce in Germany which found that half the US firms in the country were planning to move to eastern Europe.

The German version of Ted Heath’s famous judgment on “the unacceptable face of capitalism” is Schröder warning against Germany falling foul of an “unfettered neo-liberal system”. He has pledged to fight “wage dumping and exploitation”, and remarking that “responsible businesses don’t seek short-term maximisation of profits at any price”.

There are signs, however, that business is already picking up. The British Chamber of Commerce, in Cologne, said there is widespread evidence from its members that Germans are more willing to buy. The prospect of a conservative government in Berlin has given consumers more confidence.

Germany is Britain’s most important export market in Europe. In the past three years, British exports to Germany have grown by £1 billion to £23 billion a year. It is, however, an extremely tough market to crack. Marks & Spencer got its fingers badly burned and pulled out of Germany altogether. But there are successes. Vacuum-cleaner maker Dyson has established itself, selling through the electronics and white-goods chain Media Markt as well as a network of smaller retailers.

Despite attempts to rubbish Dyson and tie it up in costly legal battles, the Germans failed to drive the company out. Since 2001 sales have grown 30%-40% a year.

“A new government has to make it easier to do business in Germany. Whichever party gets into power should introduce reforms that encourage German companies to learn how to react to competitive pressures without resorting to protectionism,” said Martin McCourt, Dyson’s chief executive.

The call for change was echoed by Peter Brown, European managing director of Wincanton, the freight and logistics business. Wincanton employs 5,500 people in Germany, which accounts for three-quarters of its annual turnover of £628m. “The economy has been stagnant for three years, and one thing Germany needs is more radical change,” said Brown. “They cannot go on paying themselves the way they do. Costs are still too high.”

BT, which operates in Germany as BT Global Services, wants to see a level playing field for foreign companies. “We hope a new government would force the German regulator to operate more efficiently by promoting competition,” said Felix Mueller, head of BT’s regulation and anti-trust division in Munich.