Published: Tue, October 30, 2018
Markets | By Erika Turner

German governing parties punished in state election

German governing parties punished in state election

Her current term as chancellor runs into 2021 - and Merkel said she is "prepared" to stay in the chancellor post through her current term.

BERLIN-Angela Merkel told her conservative party on October 29, that she intends to step down as its leader but remain Germany's chancellor following a pair of state election debacles, German media reported.

Market reaction was muted with the euro remaining above last week's low against the dollar on the news, which followed setbacks for Merkel's CDU-led bloc in regional elections this month.

German Chancellor Angela Merkel will not seek re-election as the chair of her party in December, she reportedly announced to colleagues on Monday morning, kickstarting a race for her successor.

Merkel's decision has made it even more likely that the SPD will withdraw from the coalition, which would shift the burden of responsibility for the government's failure onto the Social Democrats' shoulders.

Merkel, 64, announced the move on Monday, speaking in Berlin after meetings about her party's struggles in Germany's recent election.

Her major policy shifts have reflected the wishes of a changing society - among them phasing out nuclear power after the 2011 Fukushima disaster - and shifted her CDU firmly to the political centre.

Volker Bouffier, the incumbent CDU state premier in Hesse and a Merkel ally, said his party had achieved its goal of being able to lead the next government in Hesse, but added: "We are in pain because of the losses".

Andrea Nahles, leader of the Social Democrats, on Sunday demanded a "clear, binding timetable" for implementing government projects before the coalition faces an already-agreed midterm review next fall.

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The turmoil within the CDU is echoed on the other side of the political aisle, in the SPD, which also suffered dramatic losses in both state elections. The anti-immigration, far-right Alternative for Germany (AfD) movement secured 12.8% of the Hesse vote, and is now represented in all 16 electoral assemblies.

Following the close election results, the SPD's leader, Andrea Nahles, has announced a mid-term review of the current coalition government next year, taking the declining voting numbers as a sign that the German electorate is growing exhausted of the coalition's constant in-fighting and lack of progress on bringing legislative change to Germany.

Merkel has been chancellor of Germany since winning the 2005 parliamentary election, but she's been the leader of the center-right CDU party since 2000.

"It is time today for me to start a new chapter", Merkel told reporters in Berlin.

"Merkel chose not to use barbed wire, clubs, water cannon, machine guns and tanks to chase away thousands of desperate refugees on the German border", wrote her friend, the singer-songwriter Wolf Biermann.

"We can't simply return to business as usual", she said.

AfD leader Joerg Meuthen hailed Merkel's eventual departure as "good news".

The other risk for Merkel is that her SPD coalition partners come third in Hesse, which is home to financial hub Frankfurt.

CDU General Secretary Annegret Kramp-Karrenbauer and Bundestag President Wolfgang Schaeuble could be potential candidates to replace her.

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