Merkel Suffers Major Setback in German State Vote

Voters in a crucial German state emphatically punished Chancellor Angela Merkel's pro-austerity party Sunday, awarding her main center-left rivals a major boost ahead of 2013 national elections.

While Germans nationally back Merkel and her tough stance on European belt tightening and debt reduction, voters in the bellwether state of North Rhine-Westphalia plumped for the opposition's more growth-oriented approach.

The western state, home to the Ruhr industrial heartland with large cities such as Duesseldorf and Cologne, is Germany's most populous with 18 million people, and closely watched as a taste of things to come at federal level.

A week after voters in Greece and France baulked at austerity measures, prompting a warning by Merkel against "growth on credit", her conservative Christian Democratic Union (CDU) saw its worst ever result in NRW state with about 25.7 percent, according to preliminary results.

However, its pro-austerity, pro-business coalition partners at the federal level, the Free Democratic Party (FDP), confirmed a reversal in its fortunes, after a string of humiliating defeats.

Hard on the heels of its better-than-expected result last Sunday in Schleswig-Holstein state, the FDP took about 8.5 percent, significantly better than the around three percent it is polling nationally.

Headed by the popular incumbent state premier Hannelore Kraft, the centre-left Social Democrats (SPD), who had been in a minority state coalition government with the Green ecologists, scored more than 38 percent, according to preliminary results.

The two parties looked set to again form a coalition, although with a majority this time.

The upstart Pirate party continued its winning streak with more than seven percent, gaining entry into the state parliament for the first time, the fourth regional parliament it has now entered since September.

"The defeat is bitter and it really hurts," said the CDU's main contender Norbert Roettgen, who is also Merkel's environment minister.

He had faced off against Kraft in the poll, which was triggered after the minority state government unexpectedly fell when the regional parliament failed to pass a draft budget after just 22 months in power.

"We put people at the center," Kraft said after the preliminary results.

Kraft had argued the need for public savings but also focused on jobs, education and nursery places, while Roettgen, who ran a gaffe-prone campaign, took aim at the SPD contender for clocking up public debt.

His campaign ran into trouble when he failed to commit to staying in opposition in the region if he lost Sunday's vote. He later had to backtrack after reportedly irking party allies by saying the NRW vote was a referendum on Merkel's policy on Europe.

"The minute the polling stations close... the election campaign for the 2013 legislative polls will begin," the mass circulation Bild newspaper commented Sunday.

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

Merkel plans to fight for a third term in elections due in late 2013.

NRW historically plays a big role in federal politics -- in 2005, a lost vote in the state prompted then chancellor Gerhard Schroeder to call a snap federal election which saw Merkel wrest power from him.

Bordering the Netherlands and Belgium, NRW was once known as the "land of coal and steel" helping to power the country's post-World War II economic miracle.

Both sectors have since declined but other industries such as mechanical engineering and metal and iron-working have grown.