Collapse of Germany's Social Democrats could pose problems for Merz

The historic collapse of Germany's Social Democrats (SPD) - the latest iteration of which came on Sunday in the south-western state of Rhineland-Palatinate - could have repercussions on the national level for Chancellor Friedrich Merz.

The centre-left party, which is in coalition with Merz's conservative bloc in the national government, has performed poorly in two state vote this year after falling to a historic low in last year's national parliamentary elections.

It is now set to lose its grip on Rhineland-Palatinate after 35 years in power, and its hold on major cities is also threatened, with a Green challenger defeating Mayor Dieter Reiter in Munich on Sunday in a surprise upset.

Chancellor Friedrich Merz's Christian Democratic Union (CDU) won the Rhineland-Palatinate election on Sunday with 31% according to latest projections while the far-right Alternative for Germany (AfD) was third with around 19.5% - its best result in western Germany.

The SPD's collapse in support comes as Merz's government is trying to put together a huge package of reforms and savings.

Under discussion are longer working hours, higher taxes for top earners, the scrapping of subsidy programmes and later possibly cuts in the health system and a pension reform.

This comes against the backdrop of multibillion-euro holes in the budget and the risk of yet another economic slowdown due to the Iran war.

The coalition partners' calculation is that if they govern boldly and decisively in the coming months, Germany will get back on its feet - and the AfD's upward trend might still be stopped ahead of three eastern state elections in September.

SPD leaders Lars Klingbeil, who is also vice chancellor and finance minister, and Bärbel Bas immediately took responsibility on election night.

"We cannot carry on as before," Bas said. "That is completely clear."

She argued that the party must be clearer and show on the economy and taxes that it is pursuing a policy of fairness, especially for employees and the self-employed.

Historically, the party tends to shift further to the left after election defeats, which means the SPD risks becoming unpredictable as a coalition partner for Merz's conservatives.

That could hardly be worse for Klingbeil, a centrist who wants to position the SPD as a reform party, but could now lack the authority to push his viewpoint through.

Few would be surprised if there were calls for resignations, as there has been criticism within the party, especially of Kingbeil's dual role as party leader and a Cabinet member.

But he hasn't signalled any intention of resigning, pointing to two wars, an economic slowdown and the needed reform package.

Party watchers note that Kingbeil has a direct line to Merz and there are few within the SPD that are seen as capable of negotiating with the chancellor on an equal footing.

The surprisingly clear CDU victory in Rhineland-Palatinate clears the air for the party after the bitter, razor-thin defeat in neighbouring Baden-Württemberg in early March. CDU Secretary General Carsten Linnemann spoke in an initial election reaction of a "tailwind" for Merz.

Still, a weakened coalition partner is likely to make things tougher for Merz.

After the election in Baden-Württemberg, where the SPD slumped to 5.5%, Merz spoke to Klingbeil and Bas the very next morning to urge them to maintain coalition unity. That will be repeated on Monday.

"The next day I will continue to consult with the two SPD party leaders about how we can get this country back on track together. And we still have a hell of a lot to do," Merz said on Friday at the CDU's final campaign event in Rhineland-Palatinate.

Merz ally Thorsten Frei, the head of the Chancellery, reiterated the need to achieve a reform breakthrough in order to "take the wind out of the sails of the right and the radicals."

The AfD continued its record streak in western Germany unabated, following up the record 18.8% it received in Baden-Württemberg two weeks ago with a new high of 20.1% in Rhineland-Palatinate.

But the far-right party is expected to post even larger gains in September's elections in the eastern states of Saxony-Anhalt and Mecklenburg-Vorpommern.

The anti-immigrant AfD, which finished second in last year's parliamentary election, has never entered a state government, as all other major German parties rule out cooperating with it in a policy known as the "firewall."

But after winning its first state election in Thuringia in 2024, the AfD has a chance of securing an outright majority this year in Saxony-Anhalt, which would allow it to bypass the firewall and lead a state government.

This would be a nightmare scenario for Merz, who famously promised to halve the AfD's support before becoming the leader of the CDU, and an unprecedented situation in Germany's post-war history.