Schroeder suffers surprise blow

German Chancellor Gerhard Schroeder's recent political comeback suffered a blow yesterday as opposition conservatives narrowly won a state poll that could set the tone for next year's federal election.

The result in the northern state of Schleswig-Holstein came as a surprise because the Social Democrats (SPD), who ruled the state for 17 years, had taken a lead in recent opinion polls, helped by the popularity of state premier Heide Simonis.

Soaring unemployment weighed heavily in a region with one of the highest jobless rates in western Germany, pushing the SPD to its weakest result in the state since 1958.

"The defeat would have been much worse for the SPD if it had not been for their appealing candidate," said Goettingen University political scientist Peter Loesche.

Preliminary results put the conservative Christian Democrats (CDU) at 40.2 per cent, above 38.5 per cent for the SPD.

The liberal Free Democrats (FDP), likely coalition partners of the CDU, stood at 6.7 per cent, ahead of the SPD's Green partners on 6.3 per cent.

The results mean the CDU under Peter-Harry Carstensen is set to take power in the state, three months before a crucial election in the industrial state of North Rhine-Westphalia.

After strong gains in east German state elections last September, the far-right NPD failed to make the five per cent threshold needed to enter parliament.

The result was a clear setback for Mr Schroeder, who has his sights set on winning a third term as chancellor next year.

"We did not achieve our primary goal in Schleswig-Holstein of a Red-Green majority," SPD national party leader Franz Muentefering said after the vote.

Mr Schroeder has enjoyed a remarkable comeback since the summer, winning plaudits for standing firm in the face of mass protests against his tough welfare reforms and profiting from bitter divisions in the conservative opposition ranks.

However last month's news that unemployment rose above five million for the first time since the 1930s underlined the lack of progress made in solving Germany's biggest problem since he came to power in 1998, pledging to halve unemployment.