The German jobless rise poses risks to Chancellor Angela Merkel's conservatives and her coalition partners, the Social Democrats, who will contest a federal election in September. The ruling coalition has presided over a steady fall in unemployment since the last election in 2005, but the foreign demand that has fuelled export-driven growth in the German economy since then is fading fast. Germany fell into recession in the third quarter of last year and leading economic institutes have forecast the economy could contract by 2 percent or more in 2009 -- which would be easily the worst annual performance in the post-war era. To combat the recession, the government has agreed a 31-billion euro stimulus programme and has held talks on a second package, which could total 50 billion euros and is likely to be finalised next week. "How steep the rise in unemployment will be hinges largely on what the government agrees to do in its second stimulus package," said Joerg Lueschow, economist at WestLB. "A volume of 40 to 50 billion euros is certainly the minimum of what is needed," he added. February 2006 was the last time the adjusted unemployment figures showed a rise. However, this was a technical increase due to a change in the way jobless benefits were awarded.