Angela Merkel will not seek re-election as Germany’s chancellor when her term of office ends in 2021, she has confirmed, in a surprise address at her party headquarters on Monday.

The shock announcement comes as the premier met with the senior leadership of her Christian Democratic Union (CDU) party following heavy losses in regional elections in the state of Hesse.

It has been widely assumed in Germany that the current Bundestag term, which began in 2017, would be Ms Merkel’s last, but there had been no official confirmation of this until now. The leader told a news conference in Berlin it was “time for a new chapter” in German politics.

Ms Merkel said she took responsibility for the CDU’s recent losses in local elections and told party members that she would not run again for the leadership of her party at a conference in December.

This would leave her in the position of staying as chancellor while not being the leader of her own party. The German constitution has strict rules regulating the process of appointing the chancellor, with parties nominating a named candidate for the position ahead of elections.

The move would not be unprecedented: Helmut Schmidt, West Germany’s chancellor from 1974 to 1982, never led the SPD of which he is a member.

“Firstly, at the next CDU party congress in December in Hamburg, I will not put myself forward again as candidate for the CDU chair,” she told reporters.

“Secondly, this fourth term is my last as German chancellor. At the federal election in 2021, I will not stand again as chancellor candidate, nor as a candidate for the Bundestag, and ... I won’t seek any further political offices.”

She added that she would not run for chancellor if a snap election were held before 2021, and that she had made the decision not to stay on as party chair before the summer parliamentary recess.

The chancellor said that two issues, Brexit, and US-Russia relations, would be the main focus for her as long as she remained in office.

Whoever becomes the new leader of the CDU to succeed Ms Merkel would be the front-runner to be the country’s new chancellor after the next elections. A vote is slated for December at the party’s regular congress.

Three people are so far being widely named as possible successors. Annegret Kramp-Karrenbauer, a moderate who is politically close to Ms Merkel, currently serves as the CDU’s general secretary and was formerly the regional governor of Saarland.

The dpa press agency says Ms Kramp-Karrenbauer, known informally in German political circles as as AKK, told a private meeting of senior party members she would stand for leader at the CDU congress in December.

Health minister Jens Spahn​, who has been publicly critical of Ms Merkel’s liberal refugee policy, and Ralph Brinkhaus, who leads the party’s group in the Bundestag having ousted one of the chancellor’s allies from the post in a narrow vote last month, have also been linked with the position. ​

The outgoing leader confirmed that she would not formally back any of the candidates, however.

Ms Merkel has been leader of her party since 2000 and was elected as chancellor in 2005. If she makes it to the end of her term in 2021 as planned she will be the second longest-serving chancellor in the history of the German federal republic, surpassed by only Helmut Kohl.

The iron Frau: Angela Merkel Show all 11 1 /11 The iron Frau: Angela Merkel The iron Frau: Angela Merkel Comeback queen: Angela Merkel at the Bellevue Palace, Berlin in 2007 EPA / WOLFGANG KUMM The iron Frau: Angela Merkel At home in Germany, the press are comparing Merkel to Margaret Thatcher (pictured in 1981), for her tough-talking stance on the Greek debt crisis GETTY IMAGES / REUTERS The iron Frau: Angela Merkel What Cold War? With Vladimir Putin and George W Bush in 2007 at a G8 summit in Germany. She's known to be an entertaining mimic; was she doing her 'Gordon Brown' for them? AFP The iron Frau: Angela Merkel The famous clip that showed George W Bush squeezing her shoulder The iron Frau: Angela Merkel Whispering with Silvio Berlusconi REUTERS The iron Frau: Angela Merkel Make 'em laugh: with Nicolas Sarkozy AFP The iron Frau: Angela Merkel Crowd-pleaser: Merkel's supporters at a 2009 election rally AFP / GETTY IMAGES The iron Frau: Angela Merkel Immortalised in doll form The iron Frau: Angela Merkel With other world leaders at last year's G20 summit AP The iron Frau: Angela Merkel With her husband Joachim Sauer EPA The iron Frau: Angela Merkel Campaigning in 1990 REUTERS

The chancellor, who has developed a reputation for being a canny political survivor, has had a tempestuous year – struggling with coalition negotiations to return to office, and under pressure from both left and right – particularly on the issue of migration.

Most recently Ms Merkel’s CDU has haemorrhaged liberal voters to the Greens; it had previously suffered losses to the far-right AfD. The waning of her party’s standing in the polls has sapped her once fearsome authority.