"If this image is consolidated all over the world, I fear there will be terrible consequences for Germany"

BDI director-general

The director-general of the federation, Ludolf von Wartenberg, said there had been too much tolerance towards neo-Nazis.

He told the BBC that those supporting racist attacks should pay with their jobs.

The suggestion follows calls for a ban on the far-right National Party, the NPD, after a string of suspected neo-Nazi attacks, including the recent blast which injured 10 foreigners, six of them Jews.

The government remains unconvinced that such a ban would help.

Investment threat

The BDI director-general said reports of xenophobic violence threatened investment into Germany.

Far-right National Party (NPD) could be banned

"If this image is consolidated all over the world, I fear there will be terrible consequences for investment by foreign concerns in Germany," Mr von Wartenberg said.

In a bid to tackle racist violence against foreigners, the state and federal interior ministry officials have agreed to crack down on known neo-Nazi organisations, as well as improving security at Jewish sites.

There are also plans to shut down neo-Nazi sites on the internet, which is being used to link different extremist groups.

The officials said they would also set up a national database listing people convicted of racist offences to help the police concentrate their efforts.

The problem is particularly severe in eastern Germany, which is still suffering from high unemployment and the huge social changes that followed the collapse of communism.