Angela Merkel is set to hold on to a fourth term as Germany's Chancellor next year in what is likely to be a "messy" election battle, an independent European Union expert told CNBC.

Amid rising support for extremist parties and growing discontent for Merkel's refugee policy, the 2017 general election is lining up to be an historic one for the EU's largest economy.

"Of course, it's going to be messy," Nina Schick, an independent EU expert told CNBC on Monday.

"I think the headline of the German election is going to be that the AfD (Alternative for Germany), the far-right populist party, is going to smash the threshold to get into the Bundestag. That in German politics is going to spook people - a far-right, populist, anti-migration party going into the Bundestag," Shick added.

Recent state elections across Germany showed that voters are becoming increasingly more supportive of anti-immigration rhetoric. For instance, the AfD managed to beat Merkel's CDU party in an election in the eastern state of Mecklenburg-Western Pomerania in September. While AfD obtained 21 percent of the votes, the ruling CDU came only in third with 19 percent.