German Chancellor Angela Merkel, once the most powerful politician in Europe, acknowledged herself as a lame duck today.

Merkel announced that she will step aside as leader of the Christian Democratic Union (CDU) at the party's conference in December and will not run for re-election in 2021.

The decision reflected pressure on the longest-serving head of state in the European Union after a streak of devastating defeats, and it set off a scramble among would-be successors.

Whoever emerges atop the CDU will be a favourite to become the next chancellor, perhaps far sooner than the official end of Merkel's term.

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Merkel's preferred heir, Annegret Kramp-Karrenbauer, wants to continue in her tradition of moderation and big-tent centrism.

But with Germany, and Europe, becoming ever-more polarised, challengers are likely to push for the party to tack hard to the right.

Either way, Merkel stepping down will mark a major transition for a continent she has shaped for the past 13 years with her handling of multiple debt crises, her decisions on nuclear energy and, most of all, her fateful choice to allow more than one million asylum-seekers to enter Germany.

"The time has come to open a new chapter," Merkel, 64, told a Berlin news conference today that, as is typical of her, ran short on sentiment and long on matter-of-fact pronouncements.

Merkel has been CDU chairman since 2000.

In the past, she has said that the chancellor should also be the leader of the ruling party, and that it was dangerous to divide the roles between two people. But she said today that she had changed her mind over the northern summer as it became clear that "we cannot continue with business as usual."

"Yes, this is a bit of a risk," she said. "But having weighed things very, very carefully, it is a risk I want to take."

Merkel may have had little choice. Her coalition partner, the centre-left Social Democrats, were contemplating an exit from the Government. More importantly, discontent was rising within the ranks of the CDU.

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"The internal pressure was getting too strong," said Jan Techau, director of the Europe Programme at the German Marshall Fund. "There was an overwhelming sense in the party that some freshness was needed."

Thomas Heilmann, a CDU member of the Bundestag, said the party's elected officials were relieved by Merkel's choice.


"It will give us the opportunity to have a very natural relaunch, which was definitely necessary," said Heilmann, who represents Berlin.

"I'm very loyal to her. She's earned it," he said. "But that loyalty doesn't keep me from seeing the reality, and the reality is that her results are not as good as they used to be."

Yesterday, the party suffered massive losses during regional elections in the state of Hesse, which has long been a bellwether for the nation. Just two weeks ago, the CDU's sister party, the Christian Social Union, sustained similar losses in its home state of Bavaria.

Merkel's announcement set off a flurry of speculation in the German media over who would succeed her.

Earlier this year, she appeared to have given her blessing to Kramp-Karrenbauer, 56, the onetime leader of the west German state of Saarland and now the CDU's general secretary.


But the conservative wing of the CDU is also expected to mount a challenge. Health Minister Jens Spahn, 38, and Friedrich Merz, 63, a former parliamentary leader of the CDU, were named today in German news reports as candidates.

Spahn, in particular, has been an outspoken critic of Merkel's and has advocated that the party move further right on immigration to win back supporters who defected to the far-right Alternative for Germany (AfD).

The CDU is expected to select its new chair in December at a party conference in the northern German city of Hamburg. Merkel had been widely expected to run for re-election, although plummeting party poll numbers and disappointing election results suggested that she could face a challenge.

Until last northern autumn, Merkel was the unquestionably dominant figure in German politics, with few real rivals. But national elections in September 2017 delivered an unexpectedly poor finish for the CDU, and the Chancellor's hold on power has never been the same since.


Last month, Volker Kauder, Merkel's longtime floor leader in the German parliament, was unexpectedly defeated in an internal party vote. The loss for the Merkel confidant marked a rare moment when the CDU's elected officials have defied the Chancellor's will.

Yesterday's election for the state parliament in Hesse - home of Frankfurt, the heart of German finance - gave Merkel's centre-right CDU 27 per cent of the vote.

That was good enough for first place but down 11 per cent since the state last voted, in 2013, and represents the party's worst performance there in more than half a century. Merkel today described the results as "bitter" and "disappointing".

Backing for Merkel's coalition partner, the SPD, also plummeted, falling from 31 per cent to 20 per cent - a low not seen in 72 years.

The Social Democrats' weak performance in regional elections this year in Hesse and Bavaria has added pressure on their national leadership to force Merkel into more concessions.