Germany’s ruling parties are reeling from their second electoral upset in a fortnight, after voters in a key state abandoned them in droves. The result in the central state of Hesse could plunge both parties of Angela Merkel’s coalition government into renewed crises.

Preliminary final results from a regional election seen as decisive for the future of Germany’s increasingly wobbly coalition showed Merkel’s Christian Democratic Union (CDU) slumping to 27%, the party’s worst showing in the state since 1966 and a drop of 11 percentage points since Hesse last went to the polls in 2013.

Yet the CDU was at pains to present the result as a success. The state’s CDU-Green coalition has scraped a majority, putting an end to speculation over the future of the CDU state premier and close Merkel ally, Volker Bouffier. With tensions running high in the CDU, some members have implied that if Bouffier falls, Merkel may struggle if she stands for re-election as party leader at its conference in December.

But Merkel has other reasons to worry about the result. Her coalition partner in Berlin, the Social Democrats (SPD), tanked to 19.8% in a dead heat with the resurgent Green party for second place.

The result, the SPD’s worst since 1946, will pile pressure on the party leader, Andrea Nahles, and in the most extreme potential outcome could be the shock that triggers the SPD’s withdrawal from Merkel’s coalition in Berlin, a move that would almost certainly force fresh elections.

“National politics contributed considerably to the SPD’s losses in Hesse,” Nahles said shortly after the exit poll on Sunday evening. “The state of the government is not acceptable.”

While she did not mention her own position, Nahles promised changes within her party and called on the CDU to sort its own internal conflicts. Nahles announced she would meet the SPD leadership on Monday to work out a list of goals for the party to achieve in government within a given timetable.

The trouncing for the coalition parties comes shortly after a disastrous result in Bavaria widely seen as a protest against the failings of the Berlin government. It will be seen as further evidence of the shrinking of the mainstream political landscape across Germany and Europe more widely.

The seat of Germany’s financial centre, Frankfurt, Hesse is a swing state traditionally seen as a bellwether for national politics that has been ruled by CDU-led coalitions for the past 20 years. At the state’s previous regional election in 2013, the CDU secured 38.3% of the vote and the SPD 30.7%.

Facebook Twitter Pinterest Hesse’s state premier, Volker Bouffier, arrives with his wife, Ursula, for an election party. Bouffier was expected to cling on to power. Photograph: Michael Probst/AP

Bouffier spoke on Sunday evening of “very ambivalent feelings” towards the result. On the one hand, he said, the party would take seriously the “painful losses. But on the other hand, we’ve seen that it’s worth fighting.”

While Merkel – who is due to speak at 1pm (1200 GMT) in Berlin on Monday – has yet to react to the results, the CDU general secretary, Annegret Kramp-Karrenbauer, also described the losses as “painful” and in the same breath congratulated Bouffier on having saved his coalition.

As in Bavaria, the big winner appeared to be the environmental, pro-immigration Green party, which doubled its voter share in Hesse to 19.5% at the expense of both coalition parties. The result reflects a nationwide surge, with the party polling at its highest level since 2011. Reacting to the exit polls, Priska Hinz, one of the Green’s two top candidates in Hesse, said: “Hesse was never so Green as it is today.”

As in Bavaria, Hesse’s flourishing economy and low unemployment has not prevented voters from drifting to the far right. The anti-immigrant Alternative für Deutschland (AfD) also made gains, coming fourth but still comfortably entering the state parliament for the first time on 13%. The party is now represented in all of Germany’s 16 states.

“The AfD is now firmly established in the German electorate,” tweeted the AfD leader, Alice Weidel. “Here to stay!”

Facebook Twitter Pinterest SPD supporters look glum as the exit polls are announced. Photograph: Thorsten Wagner/Reuters

The pro-business Free Democrats (FDP) were also celebrating, having cleared the 5% mark needed to re-enter parliament, with 7.5%. The FPD leader, Christian Linder, called the party the evening’s “small winners”. The hard-left Linke looked likely to stay in parliament with 6.3% of the vote.

“The only way Angela Merkel won’t come out OK is if Bouffier doesn’t remain state premier in Hesse,” said Andrea Römmele, a communications professor at Berlin’s Hertie School of Governance. Meanwhile, dismal nationwide polling figures mean the SPD has little to gain from voluntarily forcing an election, which Römmele described as the “worst outcome for the [party]”.

On the campaign trail this week Merkel was at pains to play down the significance of the regional vote in Hesse for her government, protesting that “not every regional election can be stylised into a little national election”.

But that message has not hit home with voters, many of whom were keen to register their dissatisfaction with a Berlin government marred by infighting and multiple crises. A poll released on Sunday suggested at least half of voters in Hesse had seen the regional election as a chance to teach the government in Berlin a lesson.

“For me this will be a protest vote against all this nonsense in Berlin,” said Heiko Becker, 48, a lifelong swing voter in the city of Fulda, speaking ahead of the vote. “Things are good for us in Hesse, but no one cares about that. It’s all about going against Merkel nowadays.”