Blow to Merkel after Christian Democratic Union party loses key German state

German Chancellor Angela Merkel's Christian Democratic Union party, CDU, suffered a severe defeat on Sunday in the key German state of North Rhine-Westphalia. The CDU won just over 26 per cent, according to preliminary results, while the main opposition Social Democrats, SPD, took 39 per cent in the country’s most populous state. 

Reuters/Wolfgang Rattay

The Greens scored 11.5 per cent, according to the preliminary results, while the upstart Pirate party continued its winning streak with more than seven per cent.

The vote was the third regional election in Germany in eight weeks and comes a week after Merkel's centre-right coalition lost power in the state of Schleswig-Holstein.

While Germans nationally back Merkel and her tough stance on European belt tightening and debt reduction, voters in the state handed her conservatives their
worst ever result in the western state.

The result is a further blow to Merkel, a week after her strategy for fighting the eurozone crisis took a hit in Greek and French votes, prompting her to warn against "growth on credit".

It also comes two days before she hosts French president-elect François Hollande who campaigned on a pledge to renegotiate the eurozone's fiscal pact for tighter budgetary rigour which Merkel argues is essential to underpin the continent's eventual recovery.

The SPD has echoed calls by Hollande to place more emphasis on growth in the fiscal pact and Merkel, who needs a two-thirds majority in parliament to ratify the fiscal pact, will therefore need opposition support.

Meanwhile, the single European currency came under pressure in Asian trade Monday, over the possibility of fresh elections in deadlocked, but also Merkel’s defeat which has raised doubts that her party will be able to stay in power after next year’s general election.

The euro was changing hands at 1.28 dollars and 103.23 yen in Tokyo’s morning trade, against 1.29 dollars and 103.26 yen in New York on Friday.