NRW state is seen as a bellwether for national politics German Chancellor Angela Merkel has admitted her coalition suffered a "bitter defeat" in regional elections in North Rhine-Westphalia (NRW). The chancellor acknowledged her new government, in power since October, had "many avoidable disagreements" that had hurt its chances of re-election in NRW. She warned that tax cuts would not be possible "in the foreseeable future". The NRW result means Mrs Merkel's coalition no longer has a majority in the upper house of parliament. This will make it more difficult for her government to get legislation passed. 'Warning shot' The coalition in NRW, between Mrs Merkel's Christian Democrat party (CDU) and the pro-business Free Democrats (FDP), had mirrored the one at the federal level. Many analysts believe their defeat was in large part due to the government's recent decision to contribute to a huge rescue package for Greece. Many cities in NRW are on the brink of bankruptcy. But, in her comments on the result, Mrs Merkel acknowledged that the stumbling start her new national coalition government had since September's general elections had not helped.

Analysis: Merkel faces fallout "There's no talking around it - we suffered a bitter defeat," she said. "As regards the work of the federal government, I will only say this: In the first months, we did not provide any momentum to the government in NRW. "On the contrary, we were a factor holding them back, and there were many avoidable disagreements." She warned that big tax cuts - favoured by the FDP and promised by the new coalition - would not now be possible. "The... coalition in Berlin must now set its priorities clearly," she said. "That means, from my point of view, firstly that tax cuts cannot be implemented for the foreseeable future - discussions about the euro, about [loan] guarantees and a lot of other things show us that." She warned that tax cuts were unlikely for "at least two years - the budgets for 2011 and 2012". Final results in NRW showed the CDU with 34.6% and their FDP allies on 6.7%. The Social Democrats (SPD), Germany's main opposition party, polled 34.5% of the vote, while the Greens won 12.1% and the Left Party 5.6%. It is not immediately clear what type of alliance or coalition will emerge in NRW. 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. Foreign Minister Guido Westerwelle, who is also vice-chancellor and leader of the Free Democrats, called the loss a "warning shot for the governing parties". "We must make an effort to win back lost trust," he said.



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