Levels of entrepreneurship and innovation in Germany would increase if the country's regulatory system was overhauled.

This is the conclusion of the Organization for Economic Cooperation and Development (OECD), which has advocated a new approach to managing regulation in order to enhance growth through policies such as wider consultation and impact assessment.

According to a report on the subject by the Paris-based body, steps have been taken by the German government to reduce the burden of red tape on business, something that may lead to the creation of more jobs.

However, the OECD argues that more could be done to improve regulation in the country as "the economic crisis has revealed structural deficiencies", in particular within the banking sector.

Commenting on the recommendations, the agency's secretary-general Angel Gurria called for a more liberal approach and said: "Lighter but more effective regulation can boost Germany's economy by unleashing positive forces of innovation and change."

The adjusted unemployment rate in Germany fell in April from eight per cent of the workforce the previous month to 7.8 per cent, according to Federal Labor Agency data.