The German government yesterday claimed it had defied doomsayers who had predicted that the economy would suffer from last month's value added tax rise.

"The sceptics and doom merchants who predicted the economy would not survive the VAT increase have gone a lot quieter," a jubilant Michael Glos, German economics minister, said as he presented the annual economic report, which raised the 2007 gross domestic product growth forecast from 1.4 per cent to 1.7 per cent.