German Chancellor Angela Merkel's party and its coalition allies have been defeated in regional elections in North Rhine-Westphalia, projections suggest. If confirmed, this would see Ms. Merkel's national coalition lose its slim majority in the upper house of parliament, the Bundesrat.
The campaign has been overshadowed by the government's decision to contribute to a huge rescue package for Greece. Meanwhile, many cities in North Rhine-Westphalia (NRW) are on the brink of bankruptcy.
NRW, Germany's most populous state and home to 18 million people, is in the country's industrial heartland and regarded as a weathervane for national politics.
Angela Merkel had campaigned in the state until the last minute, but the exit polls appear to confirm earlier polls that suggested the ruling coalition was trailing the combined vote of opponents including the Social Democrats, Greens and former communist party, The Left.
A result-based projection by ZDF television put Ms. Merkel's Christian Democrats (CDU) on 34.3% and their Free Democratic Party (FDP) allies on 6.6%, while the Social Democrats (SPD), Germany's main opposition party, polled 34.5% of the vote. Earlier exit polls put the Greens on about 12.5% and The Left on 6%.
The coalition in NRW between the CDU and the pro-business FDP mirrored the one at the federal level. A new coalition in NRW would jeopardise long-promised tax cuts and health system reforms at national level, as Bundesrat members are directly appointed by the state governments.
With the economic crisis dominating the campaign, opponents accused Ms. Merkel of attempting to delay a decision on the hugely unpopular rescue package for Greece until after the poll. Local councils in NRW are sinking into debt, with leading to rising kindergarten fees and the threatened closure of libraries, swimming-pools and theatre.