Mr Gerhard Schroder, the German chancellor, yesterday made a significant concession to his vociferous left-wing critics by suggesting his Social Democratic party (SPD) might restore the wealth tax abolished in 1997.

The shift marked the first sign of retreat from the chancellor's business-friendly `neue Mitte' or new centre policies following a series of heavy regional election defeats for the SPD.

The chancellor proposed to amend a draft motion being prepared for his party's congress in December to refer specifically to heavier burdens on the rich. The draft motion, considered yesterday by the party's 45-member executive chaired by Mr Schroder, will now say `the wealthy should make their contribution to securing the future of our society'. Party officials said a possible wealth tax could be used to finance higher spending on training and research.

Mr Franz Muntefering, the SPD's acting general secretary and a Schroder loyalist, denied the move represented a U-turn.

The setbacks have been partly attributed to Mr Schroder's high-profile political partnership with British prime minister Tony Blair on a more centrist platform for Europe's social democrats.