Schroeder admits 'bitter defeat' in key poll

The Conservative opposition were the big winners

Germany's Chancellor Gerhard Schroeder has acknowledged a "bitter defeat" in elections in the eastern state of Saxony-Anhalt, the last major test of voter opinion before this year's general election.

His centre-left Social Democrat party (SPD) slumped dramatically from first to third place, behind the conservative Christian Democrats and the post-communist Party of Democratic Socialism (PDS).

Mr Schroeder however insisted the result reflected on "local issues and local personalities" rather than representing disillusionment with the federal SPD, which leads the coalition government.

But the vote has immediate implications for Mr Schroeder: the conservatives now have control of Berlin's upper house of parliament, making it harder for his government to push through legislation.

Opposition booster

The Christian Democrats took 37.3% of the vote in the formerly communist state, leaping some 15 points from their score in the previous poll in 1998. The party is now set to form a government in coalition with the smaller Free Democrats (FDP), who also notched up significant gains.

Saxony-Anhalt facts

Known as Germany's "poor house"

Unemployment double national average

Lowest per capita income of any German state

Highest per capita public debt

2.1 million voters

Correspondents say the result is a huge boost for Bavarian Premier Edmund Stoiber, who will challenge Mr Schroeder for the chancellery in elections on 22 September.

Mr Stoiber called the result an "enormous encouragement" and said German voters would show Mr Schroeder in September that they had had enough of being the slowest-growing economy in Europe.

The SPD lags behind the conservatives by between two and five points in national opinion polls, although on the whole Mr Schroeder remains personally more popular than Mr Stoiber.

On Monday, Mr Schroeder indicated he would seek to use this advantage to its best effect when the electoral campaign gets underway.

"The question will be: Do you want to keep on with Chancellor Schroeder, or have Stoiber?"

Mr Stoiber retorted that the elections would not be about personalities, but politics.

Unemployment woes

Correspondents say Saxony-Anhalt, Germany's poorest state, is not representative of the country as a whole.

Voting patterns are also much more volatile in the former Communist East, where the established parties lack deep roots.

Social Democrats blamed their "extremely bad result" in the state on the low turnout, which fell to 55% from 71.5% in 1998.

However, Mr Schroeder's failure to meet an election pledge to get unemployment below 3.5 million is also thought to have counted against him in the state with the highest rate of unemployment in Germany.