The German government and the Social Democratic party are conducting a "lethal" economic policy that could inflict substantial damage on the country, according to Wolfgang Clement, a former economics minister and SPD grandee. His party, junior partner in the ruling coalition, was "gambling away the dividends of past reforms", Mr Clement told the Financial Times.

The attack - by a one-time party vice-chairman and a close ally of Gerhard Schröder, former SPD chancellor - underlines the extent of the party's departure from Mr Schröder's unpopular reform legacy under Kurt Beck, its current chairman who has taken the party sharply to the left.

It also comes at a sensitive time as Mr Beck's strategy, including a campaign for a universal minimum wage, is being tested at three regional elections this month and next. With the grudging approval of Angela Merkel, chancellor, and her Christian Democratic Union, Mr Beck managed to have jobless benefits raised last year and a minimum wage imposed on the postal sector.

Mr Clement said: "I used to shut up but I am too alarmed now . . . Everywhere in Europe resistance [to change] is rising. But you cannot stop change. Our government is not rising to its responsibility." The postal minimum wage, Mr Clement said, had been "a huge mistake". The decision had benefited Deutsche Post, the former state monopoly, against private competitors.