GSD behaviour

Question
I have a four year old pure bred german shephard,he has always barked alot, about three months ago he started getting out of our yard, he does'nt go further than our street, and when he has managed to get out he bails people up in their front yards or if people are walking down the street he will bail them up and keep barking at them, i put him on a chain while i was at work but he broke it and got out of the yard, he once again bailed up the neighbours(these neighbours did attack him with a broom the first time he escaped) and had to be sprayed to be caught by the local council, he i has now been impounded and deemed a dangerous dog, i can have him back under certain conditions, he hasn't bitten anyone, i am going to have him spayed and will take him to the vet to be checked over incase he has a nervous problem or something i have another dog who he play's very well with, when he is inside with me, he is very timid and quiet, i don't know what to do, i don't want him put down, but i also have a two year old daughter and her saftey comes first, she is never near him without me, and i don't think i let her near him at all now,just to be on the safe side not because i don't trust him,i adore my gsd do you think his behavour is dangerous,any advice would be much appreciated, thank-you.

Answer
This is one of the worst cases of ignorance on the part of a human being that I have seen in a long time.  Your dog does not belong tied up outside for any reason, and the fact that he is behaving in this manner is an indication that:
One.  He is a GSD.
Two.  He has received ZERO training and socialization from YOU.
Three: Your neighbors are afraid of him, through no fault of his own, and they should be.
Four:  This dog will lose his life because of you and your negligence as the owner of an intelligent breed with a high prey/guarding instinct who obviously (from your description of him in your home) is extremely insecure in your household.

How you could bring a dog of this size and breed into a home with a human infant and NOT SOCIALIZE and NOT TRAIN it, is BEYOND ME.  Find this dog another home, one with an experienced GSD owner.  Look for rescue organizations for the GSD in your area.  It's not too late for him if he goes into proper, educated, caring hands...and that IS NOT YOU.