Merkel's conservative party does well in German local vote

Schaeuble presents draft budget for 2018 in Berlin

Schaeuble presents draft budget for 2018 in Berlin

German Chancellor Angela Merkel's conservatives came in first Sunday in a local election seen as a warm-up for her bid for a fourth term in a national election in the fall.

The Social Democrats had governed the region of 2.8 million people since 2012 in coalition with the Greens and the small SSW party of the region's Danish majority.

Schleswig-Holstein's CDU candidate Daniel Guenther, speaking after projected results were first announced, said that voters had made a clear decision against the incumbent state government, which he referred to as "the coalition of stagnation".

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Nationally, the Social Democrats play second fiddle in a governing coalition headed by Ms Merkel, who became chancellor in 2005.

Schulz has not ruled out a possible alliance with the far-left Linke party - a scenario that cost the SPD dear in Saarland, where voters flocked to Merkel's CDU.

"In both states, the SPD is already in power, so these elections are theirs to lose", Manfred Guellner, head of the Berlin-based pollsters Forsa, said in an interview. "Merkel is doing very well in using this situation to her advantage".

Another test is coming next weekend with the elections in Germany's most populous state, North Rhine-Westphalia, which is known as a Social Democrat stronghold.

"This hurts like hell", said a dejected Schulz after TV network projections showed the Social Democrats picking up less than 27% of the vote in the northernmost state, a drop of almost 4 percentage points from the last election.

One key unknown is whether the Germany-wide collapse in support for anti-euro, anti-Islam party Alternative for Germany (AfD) after a vicious internal falling-out between moderates and hardliners will be reflected in the state election results.

CDU is about to unseat from power the state government dominated by its ideological rival and yet partner in Germany's ruling coalition and the Merkel Cabinet, the Social Democrat party. Christian Lindner, the leader of the liberal Free Democrats (FDP), a potential coalition partner for Merkel if she beats Schulz in September, told the Frankfurter Allgemeine Zeitung (FAZ) on Wednesday that he expected an "uncomfortable" discussion with Macron on Europe.

But with the pace of new arrivals slowing sharply, surveys show the conservatives gaining ground.

Defeated Social Democratic governor Torsten Albig called it "a bitter day".

Landing with a bump back at 30 per cent in national polls, Mr Schulz and his SPD team face a tricky task: to win back disillusioned left-wing SPD voters without scaring away centrist supporters and business leaders - and all the while distinguishing himself from Germany's centrist chancellor.

The issue of immigration featured only marginally Sunday in Schleswig-Holstein, where education, traffic, and the expansion of wind power dominated the debate.

Germans in the northernmost state of Schleswig-Holstein voted on Sunday in a closely watched regional election.

Beyond its significance as the last-but-one regional election before September, there are plenty of local peculiarities in today's vote. A good showing Sunday in the region with a population of 2.8 million would reinforce their prospects for challenging Merkel in the nationwide election on September 24.