German Chancellor Angela won Sunday's parliamentary elections which gave her a new term as head of a center-right government.
"I want to be the chancellor of all Germans, so that things improve for our country."
Although the wildly popular Merkel savoured her victory, the daily Tagesspiegel said the score, the right's worst since 1949, marked a "black eye" for the chancellor.
After barely squeezing into office four years ago and being forced into a ruling partnership with her main rivals, the Social Democrats (SPD), Merkel secured a parliamentary majority with the FDP, her partner of choice in the Sunday vote, Reuters said.
Projections of the election results from German public television stations showed Merkel's conservative bloc -- the Christian Democratic Union (CDU) and the Bavarian Christian Social Union (CSU) -- on 33.8 percent, down from 35.2 percent in 2005, and their second-worst result in the post-war era.
But the FDP compensated for those losses, surging to 14.5 percent, its best score ever, and putting the center-right partners over the top.
The SPD, which has been in government for over a decade, was the big loser in the election and will join the environmentalist Greens and Left party in opposition after plummeting more than 11 points to 23.1 percent, the party's worst result since the war.
"There is no other way of saying it, this is a bitter defeat," Merkel's SPD rival, Foreign Minister Frank-Walter Steinmeier, told dejected backers.
Projections showed the Greens on 10.1 percent and the Left on 12.5 percent.
"There will be more regulation, we've seen this come out of the G20 meeting as well, but only as much regulation as will be necessary," said Klaus Wiener of Generali Investments.
The next government faces major economic challenges. It will have to get a surging budget deficit under control, cope with rising unemployment and ward off a credit crunch as fragile banks rein in lending.
Merkel's conservatives said before the vote they would pursue 15 billion euros in tax cuts if elected but refused to put a timeframe on their plans given the dire state of public finances. The FDP wants to move quickly and favors a much larger 35 billion euros in cuts.
Unemployment is forecast to shoot higher, and health care, education and the bloated social security system are in dire need of reform. Public finances are in tatters and its population is ageing fast.
Abroad, the main challenge is Afghanistan, where Germany has around 4,200 troops in the NATO force ensnared in the eighth year of an ever more deadly struggle with insurgents.
Merkel, Germany's first woman chancellor, ran a cautious campaign that steered clear of the bold economic reform plans she advocated before the 2005 vote.
While governing with the SPD over the past four years, she has shifted leftwards, adopting traditional leftist themes like climate change and family policy which could put her at odds with the FDP.
AgenciesLast Mod: 28 Eylül 2009, 12:51