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Angela Merkel will not seek re-election as German chancellor in 2021

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Germany’s chancellor, Angela Merkel has announced that her fourth term as chancellor will be her last.

Speaking after disastrous regional elections in Hesse and Bavaria for her Christian Democrats and its Bavaria-only sister party, Merkel on Monday said she saw the results as a “clear signal that things can’t go on as they are”.

The euro fell briefly following Merkel’s announcement, reflecting anxiety at the planned departure from Europe’s top table of the cautious and experienced German chancellor.

She said she would not be standing as party leader at the CDU conference in December nor seek another term as chancellor at Germany’s next federal elections, due in 2021, adding that she would withdraw completely from politics after that date.

She also stated she would also not run for chancellor if snap elections were called before 2021.

Often hailed as the world’s most powerful woman and the de facto leader of the free world, Merkel long enjoyed German voters’ support as a guarantor of the country’s stability and prosperity.

But her authority has been severely weakened since her decision to keep Germany’s borders open at the height of Europe’s migrant crisis in 2015. The subsequent arrival of more than one million asylum seekers left the country deeply polarised and fuelled the rise of the far-right.

Merkel said she hoped her planned departure would end bitter fighting in her weak and fractious right-left coalition and allow it to focus on governing, declaring that “the picture the government is sending out is unacceptable”.

Voter dissatisfaction with the federal government had had a regrettable negative influence on the results in Hesse, she said.

Seeking to draw a line under a series of political crises that have rocked her fragile coalition, she added that her 13 years as chancellor had been a “daily challenge and an honour”, but that she recognised it was time to “start a new chapter”.

It had been widely assumed after her party’s disappointing showing in last year’s federal elections that this, Merkel’s fourth term as chancellor, would be her last, but she had not previously commented on her future.

She said on Monday she has made the decision before the summer parliamentary recess and had planned to announce it next week.

Her decision not to seek re-election as chair of her centre-right party kickstarts what looks set to be a close-fought race to replace her as its candidate for chancellor in 2021. Merkel, 64, has been CDU chair since 2000 and chancellor since 2005.

Her presumed favoured successor is the party’s secretary general, Annegret Kramp-Karrenbauer who announced her candidacy on Monday, but Merkel declined to back her, saying she did not want to influence the election.

Friedrich Merz, a former parliamentary leader of the CDU/CSU alliance, has also joined the race to succeed his old party rival. Other favourites are the health minister Jens Spahn and the state premier of North Rhine-Westphalia, Armin Laschet.

Christian Lindner, the leader of the liberal FDP party, was the first to demand Merkel’s resignation as chancellor on the back of her decision, calling for her ruling conservative bloc to “be prepared for a real new beginning in Germany”.

Merkel’s CDU allies, however, seem ready to accept her decision to stay on as chancellor for now. The former president of the German parliament Norbert Lammert told Die Welt it was acceptable as part of a “transition phase”, while the head of the CDU in the German state of Thuringia, Mike Mohring, spoke of a “turning point”. Others greeted the chance for renewal in the party.

David McAllister, a senior CDU MEP and close Merkel ally, said the chancellor’s announcement had come as a surprise to everyone.

“What she did today is give our party a chance for a fresh start,” he told the Guardian. He said he would welcome the continuation of the grand coalition, but urged all parties to put aside their differences.

“It is important that we now learn from the mistakes of the last months, all three coalition partners should stop fighting in public and concentrate on the issues. That is what Germans expect from their governments.”