The German government is facing a “Herculean task” to manage its economy, tiffany pendants to boost growth and bring state spending back under control simultaneously, Angela Merkel, the chancellor, has admitted.

She rejected the criticism of Germany’s export-led growth model by other European countries. “Where we are strong, we will not give up our strengths, just because more of our exports are bought than those of other countries,” she said.

“That would be the wrong European answer to [the challenge of boosting] our continent’s competitiveness.”

Speaking in the annual German budget debate yesterday, Ms Merkel defended the record of her centre-right coalition government in the face of strong attacks from the opposition, and backed the savings programme of her finance minister, Wolfgang Schauble .

The highest net borrowing requirement of any postwar German government – EUR80bn ($110bn, pound(s)71.7bn) of a EUR320bn budget for 2010 – was necessary to revive growth, she said.

But “difficult savings measures” would also be needed to return to a balanced budget.

The opposition Social Democrats are arguing that the government could actually tiffany earrings the budget deficit by cutting out tax breaks for lobby groups such as the hotel industry.

In an outspoken attack on the record of the ruling coalition, which has been riven by public disagreement over tax cuts, health reforms and welfare spending in its four months in office, Frank-Walter Steinmeier, the former vice-chancellor and SPD parliamentary leader, said Germany had not been so badly governed for decades.

“This . . . coalition has not a single convincing common project,” he told the chancellor. “You are facing the ruins of a wrecked marriage. Anyone can see that.”

It was time for Ms Merkel to do her duty and bring some order into the coalition, he added.

The chancellor retorted that her government was perfectly capable of acting, but “new thinking” was needed to meet the scale of the task.

Promising that there would be tax cuts ahead – without giving a timescale – she tiffany necklaces that 90 per cent of the relief would go to consumer spending.

Germany’s leading economists have warned that German consumers are notoriously reluctant to spend any extra cash in their pay cheques, preferring to boost their savings when they see the government itself borrowing.

In the latest economic forecast, the Dusseldorf-based RWI institute warned that growth in 2010 might not exceed 1.4 per cent, compared with a previous forecast of 1.6 per cent, after zero growth in the last quarter of 2009 and a prolonged period of freezing winter weather.