Five takeaways from Germany's regional elections

BERLIN/FRANKFURT, Sept 21 (Reuters) - Elections in two German states on Sunday resulted ‌in severe losses for the country's ​leading Christian Democrats, ​whose Chancellor Friedrich Merz is facing pressure to keep the far-right Alternative fuer Deutschland party at bay.

Here are five takeaways from regional elections in the northeastern state of Mecklenburg-Western Pomerania and Germany's capital Berlin.

MERZ IS DOWN, BUT NOT (YET) OUT

The results mark a major setback for Merz and his CDU party, whose voters have flocked to the ‌AfD, increasingly doubtful the 70-year-old can revive Germany's economy and bring down the cost of living.

Facing the lowest approval ratings for any chancellor since records ⁠began, Merz, who himself described the outcome as a "disaster", is under pressure to deliver on his promised reforms as calls mount for him to resign after less than 17 months in the job.

While Merz signalled he would stay on and continue ‌with his reform agenda, Sunday's losses raise questions about ‌his position within the CDU, whose result in Mecklenburg-Western Pomerania marked its worst in any state election since 1949.

Merz's weakened position as the leader of the European Union's largest and most powerful member could undermine unity in the bloc, where far-right parties continue to gain while relations with the United States have significantly cooled and economic pressures have intensified.

AFD CONSOLIDATES LEADING POSITION

The ​AfD gained significantly in both states and became the strongest party in Mecklenburg-Western Pomerania, where it more than doubled its result compared with 2021.

This is the second time in two weeks that the AfD has captured the biggest share of votes in a German state election, after winning in Saxony-Anhalt earlier this month, boosting its momentum ahead of federal elections due in 2029.

The AfD, ⁠already the strongest party in nationwide polls with 29%, has drawn support for its pledges of tough action to deport foreigners with no right to stay in Germany, as well as on returning to cheap Russian energy and promoting more conservative values centred around ​the traditional family model.

Other big parties, however, are shunning coalitions with the AfD under a "firewall" strategy, making it unlikely that the party will govern in Mecklenburg-Western Pomerania or in Berlin, where it came in third.

COALITION-BUILDING IS GETTING TOUGHER

As the AfD gains momentum and voters split across more parties, ​stable majorities are becoming harder to build. Preliminary results show that a future government in Mecklenburg-Western Pomerania would need ‌three parties to function.

This splintering will require more willingness to compromise in a country that has traditionally run on two-party governments. A three-way "traffic light" coalition in 2021, the first such tie-up on the federal level, dissolved after less than three years.

The firewall strategy has so far kept the AfD from power ⁠but the party's broadening appeal to voters has raised questions about whether that strategy is still viable.

These changes are forcing rivals to explore alternative coalition arrangements. In Mecklenburg-Western Pomerania, the most likely option appears to be for the second-place Social Democratic Party to add the Greens to their existing coalition with the Left Party.

In Berlin, the victorious Left Party could form a majority with the SPD and the Greens.

ECONOMIC ANXIETY PLAYS OUT AT THE POLLS

Germany's weak ⁠economy is becoming a deciding factor at the polls, with voters from across the spectrum frustrated by high living costs and economic uncertainty.

Campaigning in both states took place against a backdrop of surging fuel prices linked to ​the Middle East conflict and tens of thousands of additional job cuts in German industry. Years of economic stagnation have prompted some voters to look outside the political centre.

In Berlin, the Left Party struck a chord with its focus on the city's housing shortage, pledging to build affordable new homes, forcibly reduce rents on properties that are 20% or more above the local average, and curb holiday rentals.

The AfD won support with a proposal ‌to revive the Nord Stream gas pipeline from Russia, which terminates in Mecklenburg-Western Pomerania. The party says reviving the pipeline with Russian gas would lower energy costs.

VOTERS TURN AWAY FROM POLITICAL CENTRE

The hard-left party Die Linke also scored strong gains, as frustrated voters drifted away from the mainstream.

In Mecklenburg-Western ‌Pomerania, Die Linke drew 28,000 voters from Merz's conservative CDU and 45,000 from the centre-left SPD, according to polling by infratest dimap for broadcaster ARD.

The figures illustrate the party's increasing appeal among the SPD's traditional working-class base.

Mecklenburg-Western Pomerania ⁠premier Manuela Schwesig of the SPD said opposition to aid to Ukraine and ‌support for the defunct Nord Stream pipeline with Russia were ​two reasons why voters in the former East German region migrated to the AfD, which is considered Russia-friendly.

In Berlin, the SPD lost some 36,000 voters to the Left Party, according to the preliminary data. The Greens, often a kingmaker in German politics, lost 51,000 voters to that party.

(Reporting by Rachel More and Christoph Steitz; ‌Editing by Edmund Klamann)

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