German Chancellor Angela Merkel's Christian Democratic Union (CDU) party suffered heavy losses in Sunday's regional election in Hesse state.

Iran pressEurope: The result was a disaster for both of the Germany's main government parties, with the Christian Democrats losing ten percentage points and the Social Democrats suffering their worst result in a state that was once their stronghold.

Though diminished, Angela Merkel’s CDU remains the largest party in Hesse and will probably retain its' hold on the regional government, renewing a coalition with a Green party that saw a huge surge in its share of the vote. That is good news for the chancellor, the Financial Times reported.

German Chancellor Angela Merkel may well have had to resign as CDU leader if the party had lost power in Hesse, a state it has ruled for 19 years.

Though the result was terrible for the Christian Democrats, Merkel has in some respects dodged a bullet — for now at least.

But her relief will be short-lived, and overshadowed by the dismal performance of the SPD, junior partner in her Berlin coalition.

Its' stunning decline is now fast emerging as the biggest existential threat to the Merkel-led government — and perhaps the most destabilising factor in German politics.

German leader Angela Merkel's party suffers heavy losses in key region election

A dispute between two camps in the SPD is now likely to flare up again with renewed force. It is between those who believe the only way the party can avoid further defeats is by quitting Merkel’s grand coalition and renewing itself in opposition — and those who believe that quitting would be even more self-destructive than staying in.

If the first group prevails and the SPD pulls out, Merkel’s government will fall apart and new elections will have to be held. That could spell an abrupt end to Merkel’s 13-year reign: political observers in Berlin think it unlikely that she would run again. However, on Sunday night, the pragmatists in the SPD appeared to be prevailing.

The government must make clear “that we’re ending all these debates about whether we will rule together or not”, said Andrea Nahles, the SPD leader.

Nevertheless, the message was that something had to change in Berlin — and fast.

Nahles blamed the SPD’s poor showing in Hesse firmly on the coalition ructions in the capital. “The state of the government is not acceptable,” she said.

It must, Andrea Nahles added, present a “clear, binding road map for a politics that is in the interests of voters.”

Based on how that plan was then implemented, the SPD would have to decide whether to continue to prop up Ms Merkel’s party or not.

The government has indeed had a rough ride. In June, an acrimonious conflict over asylum policy between the CDU and its Bavarian sister party the CSU brought the coalition to the brink of collapse.

Later, ministers became embroiled in another unseemly row over Hans-Georg Maassen, head of the domestic intelligence agency, whom the SPD suspected of rightwing sympathies.

“For the first six months, the grand coalition was really a disappointment,” said Stephan Weil, the SPD prime minister of Lower Saxony.

It had passed some decent laws, but “that’s not enough when everything is overshadowed by discussions which are, in part, just absurd”. “Normal policy just can’t get through in such a situation,” he said.

Christian Democratic Union (CDU) top candidate and Hesse State Prime Minister Volker Bouffier reacts on first exit polls

And the only beneficiary of all the internecine strife, Stephan Weil said, was the Alternative for Germany, the far-right party that scored 13 per cent in Hesse, more than 8 percentage points more than it won in 2013.

It is now represented in all of Germany’s 16 regional parliaments and is the biggest opposition party in the Bundestag.

The leadership challenge Angela Merkel’s fading authority is a problem for Europe For Volker Bouffier, Hesse’s CDU prime minister, the election campaign had been “like no other, ever before”.

In Jul. 23, around 25,000 people braved the rain in Munich to protest the hard-line immigration stance of Chancellor Angela Merkel's Bavarian allies three months before they face a tough state election in Bavaria.

The violence and heated debate on immigration have brought back to the fore what has become the most challenging political issue for Merkel, especially in the former communist east of Germany where the far-right anti-immigration alternative for Germany (AfD) is the number one party in some towns and regions.

Following criticism of Merkel's earlier open door policy, her government has increasingly tightened asylum laws as conservative and far-right disquiet has grown.

After an initially jubilant welcome, the migrant influx sparked a strong backlash that saw a spate of hate crimes and swept once-fringe party AfD into parliament. 101/201

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Social Democratic Party (SPD) top candidate Thorsten Schaefer-Guembel and his wife Annette / Hesse state election, October 28
Video by Reuters
Christian Democratic Union (CDU) top candidate and Hesse State Prime Minister Volker Bouffier reacts on first exit polls