The overhaul — immediately denounced as suspect, inadequate and antisocial by the opposition — came after all-night negotiations between the Christian Democrats and the Social Democrats, the two governing parties.

The deal marked the latest unpopular market reform to be smuggled through by the German Government while the country remains in the grips of football fever. The mass circulation Bild newspaper, which would normally have plastered its front page with hostile commentary, buried the news inside.

On Wednesday — the day after Germany plays Italy — the Government will present the 2007 budget, cutting subsidies and tightening belts in the hope of meeting strict EU public borrowing limits. Other measures that are galloping through Parliament include the ratification of an increase in VAT and reform of the federal system.

“It’s astonishing what is happening,” said Guido Westerwelle, leader of the Free Democrats, which is the main opposition party. “Personal contributions to pensions have gone up, we are witnessing the biggest single tax increase in German history and now it looks as if health contributions will also go up next year too. But as long as the German team goes on winning nobody is paying attention.”

The health reforms provide for compulsory health insurance for all children — at an extra cost next year of ¤1.5 billion — which has been a long-standing aim of the Social Democrats. However, Frau Merkel, the Chancellor, insisted that this could not be financed through yet another tax increase. So health insurance contributions for the whole nation will go up by 0.5 per cent from next year. The reforms were vehemently criticised by the state insurers, patients’ associations and by employers. Big business argues that it will become even more expensive to hire new employees.

The fundamental aim of the change is to give more choice to patients and to meet the huge costs of prescribed medicines.

The Government’s calculation is that Germany will reach the World Cup final — there now seems to be a three-line whip on Cabinet Ministers attending games — and that the euphoria will continue throughout the summer holidays.

This should protect the Government from hostile voters at local elections in Berlin and Mecklenburg in September.

The real trouble is likely to come in extra time. Economists predict that from January next year domestic demand in Germany is likely to dribble away as consumers are squeezed by higher taxes. Political analysts predict that the Government will run into trouble in the second half of the year. “I don’t see how this current line-up can hope to last the course,” Herr Westerwelle said. And he was not talking about Michael Ballack’s men.

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