THE job cuts at Deutsche Telekom could not have come at a worse time for Angela Merkel, Germany’s Chancellor-designate.

Her attempts to put together a “grand coalition” of Christian Democrats and Social Democrats (SDU) committed to creating a million or more jobs have faltered already. Edmund Stoiber, the prospective economics minister, has dropped out of the government, while Franz Müntefering, the prospective employment minister, has resigned as SDU chairman. Together, the two men were supposed to produce a “jobs miracle”.

Now Frau Merkel is struggling to keep command of her team and her employment agenda. Unemployment figures dipped slightly yesterday, bringing the overall rate down by 0.2 per cent to 11 per cent.

However, growth forecasts have been scaled down — 0.8 per cent for this year and 1,5 per cent for 2006 — but suggest that domestic demand could pick up.

Yet the positive signs are tentative. German companies are laying off masses of workers and some appear to have waited until after the election to avoid being caught in the political crossfire.

Deutsche Telekom is a major employer. It can, at a stroke, blunt the benign effects of the economic recovery and sour the relationship between a future Merkel government and the trade unions.

Frau Merkel had wanted to take over on November 22 with a reputation for technocratic competence. Instead, her fledgeling government is heading for an early demise.

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