Angela Merkel punished by voters for dithering over Greek bailout

Exit polls in North Rhine Westphalia indicate Angela Merkel risks losing her majority in the upper house of parliament

Exit polls show Angela Merkel's Christian Democrats (CDU) dropped more than 10% in North Rhine-Westphalia election. Photograph: John MacDougall/AFP/Getty Images

Angela Merkel suffered a bruising defeat in a key regional election as voters turned on her centre-right alliance after a campaign that was eclipsed by the Greek debt crisis.

The German chancellor's Christian Democrats (CDU) dropped more than 10% in the election in North Rhine Westphalia, according to exit polls. The CDU, which polled 34.5%, and its coalition partner, the Free Democratic party (FDP) – which secured 6.5% – no longer have an outright majority.

The defeat is likely to cast a shadow over the rest of the Merkel government's term in office. While the campaign was dominated by regional issues such as bankrupt municipalities and education funding, it was overshadowed by the international issue of debt-ridden Greece.

Merkel was widely accused of delaying a decision over the massive Greek bailout for fear that she would isolate voters in North Rhine Westphalia. In the event it was her perceived dithering that is believed to have contributed to the CDU's loss of support, along with a local party funding scandal.

Crucially for Merkel, the poll setback means that her coalition will now lose its majority in the Bundesrat, or upper house of parliament, which will make it far more difficult for her government to push through legislation.

The opposition Social Democrats (SPD), which had run on a par with the CDU in the polls for some weeks, also appear to have won 34.5% of the vote (a loss of 2.6%), while the Greens increased their standing by 6.3% to 12.5% – not enough for the two to form a majority.

The Linke – or Left – party, a relatively new political formation with its roots in the former communist East, increased its influence by securing 6%, enabling it to enter the regional state parliament for the first time.

With the CDU/FDP unable to form a coalition, and the SPD/Greens in a similar position, options for a new administration in North Rhine Westphalia are wide open. One not unlikely constellation is a grand coalition between the CDU and the SPD, which some Merkel insiders have said she might even favour over an CDU/FDP alliance as being potentially more workable. Merkel ruled with the SPD on a national level until last year.Meanwhile her future as party leader is now expected to be a subject for fierce discussion within the CDU over the coming months.