German Chancellor Merz Survives Regional Defeat

German Chancellor Friedrich Merz faces mounting pressure after his party suffered a major regional election defeat. The far-right AfD surged in the polls while coalition tensions grew over the government reform agenda.

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German Chancellor Friedrich Merz gives a statement after first exit polls of the Berlin and Mecklenburg Western Pomerania state elections, at the CDU headquarters in Berlin, Germany, September 20, 2026. REUTERS/Christian Mang

Chancellor Friedrich Merz faced intense pressure on Monday after his conservative party suffered its worst postwar regional defeat in Germany, missing parliament thresholds in Mecklenburg-Western Pomerania. The setback follows sluggish economic growth and deep public divisions over pension and tax reforms. Investors are closely watching how the coalition friction impacts fiscal stability in Europe's largest economy.

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