Merkel fights for majority in tight German election race

Merkel fights for majority in tight German election race

BERLIN - Chancellor Angela Merkel looked on track to win a third term in a weekend election in Germany but faced a battle to preserve her centre-right majority and avert a potentially divisive coalition with her arch-rivals, the centre-left Social Democrats (SPD).

The vote on Sunday is being watched across Europe, with many of Berlin's partners hoping it will bring about a softening of the austerity-first approach Merkel has promoted since the euro zone debt crisis broke out nearly four years ago.

But the prospect of major shifts in her euro policy are slim, even if she is forced into a "grand coalition" with the SPD, whose candidate Peer Steinbrueck has criticised the chancellor for choking off growth in southern members of the currency bloc by insisting on spending cuts and painful reforms.

"Germany remains committed to euro zone membership, but public opinion and institutional constraints ... limit the scope for any German government to drastically alter course towards more generous support policies," analysts at Citi Research said in a research note.

Two days before the vote, a survey by Forsa for private broadcaster RTL showed Merkel's conservatives -- the Christian Democratic Union (CDU) and its sister Bavarian party the Christian Social Union (CSU) -- 14 points ahead of the SPD, meaning she will almost surely return for a third term.

But her combined centre-right bloc, which includes the business-friendly Free Democrats (FDP), was in a dead heat with left-leaning opposition parties, with both camps on 45 per cent.

That makes the election in Europe's largest economy too close to call.

Merkel could win a narrow majority with the FDP, her preferred partner, or fall short and be forced into difficult negotiations with the SPD which could last up to two months and result in big changes to her cabinet, including the departure of Finance Minister Wolfgang Schaeuble, a key player in the crisis.

The wild card is a new anti-euro party, the Alternative for Germany (AfD), which polled 4 per cent in the Forsa survey but is given a decent chance of vaulting above the 5 per cent threshold needed to win seats in parliament on election night.

That would doom Merkel's hopes of continuing her current coalition and stir concerns about rising German euroscepticism, though its impact on government policy would likely be limited.

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