The industrial action would hit heavy industry in Germany and elsewhere in Europe, and could cause damages worth €50m a day or more, economists said.

A regional labour court in Chemnitz, eastern Germany, ruled on Friday that the GDL train drivers' union was also allowed to mount strikes covering freight transport and high-speed long-distance trains.

The court ruling marks a big victory for the GDL and a turning point in the seven-month industrial dispute, in which the union is demanding a separate labour contract and wage increases worth up to 31 per cent.

In recent weeks strike action has focused on local and regional trains, disrupting transport links for millions of commuters, while politicians and business leaders have warned against the possible impact of a freight-sector strike.

Manfred Schell, GDL chair, said the union would consider strikes on freight and long-distance trains, but no industrial action would occur before Tuesday. He said strikes would be avoided if Deutsche Bahn was willing "to place a reasonable offer on the negotiating table".

The German rail operator last month offered train drivers a wage increase of up to 9.5 per cent and a €2,000 one-off payment, but this was immediately rejected by the GDL as insufficient.

A DB spokesman in Chemnitz said the company was "very disappointed" by the ruling, but refused to comment whether a new wage offer would be presented.

Industry leaders warned that a freight transport strike would cause "drastic damage" to Germany's economy, as the rail network plays a key role in the country's decentralised economy. Sectors such as steelmaking and coalmining, plus parts of the motor industry and container transport, would be hardest hit by a strike.

Claudia Kemfert, transport expert at Berlin's DIW economic institute, said a freight transport strike could cost companies €50m a day, rising above €500m a day if the strike lasted over seven days. Over 60 per cent of Germany's rail links for freight transport connect with routes elsewhere in Europe, so European business could also be affected. Last year 343m tonnes of goods were transported by rail, with coal and steel making up a third of this volume.

The GDL is the smallest of three rail unions. The other unions earlier this year agreed a wage increase of 4.5 per cent.

See also:

German Rail Service Stoppages Could Spread

Der Spiegel: November 02, 2007

COURT OVERTURNS STRIKE LIMITS

A German court has ruled that the train drivers' union GDL can expand its strike on local train services to include freight and national long-distance passenger services.

Following Friday's court ruling, train driver strikes in Germany could soon hit the country's high-speed ICE network.

Recent German railway strikes in major cities could soon go national. On Friday, a Saxony state labor court in Chemnitz ruled in favor of the GDL train drivers union and overturned a lower labor court's Oct. 5 decision restricting it from halting service on freight and long-distance passenger trains.

Though it imposed significant restrictions -- saying nationwide strikes would be "disproportionate" to the union's claim -- lower court judges had expressed their sympathy for the strike efforts, giving the green light for union members to stop work on local and commuter trains (more...). Both GDL and Germany's national railway, Deutsche Bahn, appealed the decision.

Following Friday's ruling on that appeal, strikes on freight train services are expected in the next several days -- a move German business groups have warned would cause significant economic damage. GDL boss Manfred Schell, who described the ruling as a "total victory," said GDL needed time to think before it could make any concrete announcements about service interruptions.

GDL has long said that the next escalation of strikes would affect freight services and that it would only interrupt service on long-distance, intercity trains if it were still unable to reach a deal with Deutsche Bahn. But Schell hinted Friday that the country's ICE high-speed rail network was also part of GDL's strike "arsenal."

Meanwhile, officials at Deutsche Bahn expressed disappointment over the ruling, with a spokesman claiming it was "not a good day for our customers."

GDL and Deutsche Bahn have been locked in a wage dispute since spring. GDL is demanding its own wage deal and salary hikes of up to 31 percent as well as improved working hours.