Sept. 29 (Bloomberg) -- German Chancellor Angela Merkel's Bavarian allies lost the absolute majority they've held in the state parliament for almost 50 years, eroding her political base a year before national elections.

The Christian Social Union, Bavarian sister party to Merkel's Christian Democratic Union, won 43.4 percent in state elections yesterday, final results show. That's more than 17 percentage points less than at the last state election in 2003.

The result is a blow to Merkel, who came to power in 2005 with a single seat majority in the federal parliament with the help of the CSU's 46 lawmakers. She now faces a national election in September 2009 with a weakened political ally just as her main rivals, the Social Democrats, are polling higher after a change of leadership.

``This will cause a shock of seismic proportions in Berlin,'' Paul Nolte, a politics professor at Berlin's Free University, said in an interview. ``Merkel can say goodbye to her dream of the CDU with the CSU getting at least 40 percent in the federal elections. That's over: Suddenly, her prospects next year have started to look much less rosy.''

The Social Democratic Party and the Greens, both in opposition in the last state parliament, took 18.6 percent and 9.4 percent respectively, the results show. They will be joined in the Munich parliament by the Free Democratic Party, which won 8 percent of the vote, and the Free Voters, with 10.2 percent. The Left Party scored 4.3 percent, below the 5 percent threshold needed to win parliamentary seats.

2009 Election Themes

Merkel told reporters in Berlin that the party will discuss the causes for the ``disappointing'' result today. One consequences is that the economy, labor, education and integration will all be key themes for next year's national election, she added.

``We'll stand together, the CDU and CSU,'' she said. ``In the next months in the grand coalition, the Union will have to be a factor of stability. We'll have to struggle to deal with international events, including the financial crisis and its effects on Germany.''

CSU party leader Erwin Huber and General Secretary Christine Haderthauer are expected to resign at a meeting of the party leadership in Munich, N-TV reported, citing unnamed party sources.

The CSU, a self-proclaimed party of ``conservative values,'' has ruled Bavaria without need of a coalition partner since 1962 with its beer-and-lederhosen appeal to a swathe of society from company executives to low-income families. The party -- which last year defenestrated Edmund Stoiber, a one- time candidate for chancellor, after 14 years as leader -- suffered the biggest drop in support for any party in a state election since the 1950s, according to ZDF television.

`Revolution'

``Revolution in Bavaria!'' ran the front page headline in Bild, Germany's biggest-selling newspaper.

``This is a painful and difficult day for the CSU,'' Huber told supporters in Munich late yesterday in comments carried live on television.

The party will have to ``bite into the sour apple,'' said Guenther Beckstein, CSU prime minister of Bavaria, the wealthiest of Germany's 16 states and home to nine companies from the benchmark DAX-30 stock index, including Siemens AG and Adidas AG.

``We failed to mobilize the middle-classes and voters registered their preference for a coalition,'' Beckstein said. He added that he intends to stay on and lead the new bloc in the state parliament.

Coalition Configurations

The CSU will now need to seek a coalition partner if it is to retain power. Merkel's favored ally nationally are the pro- business Free Democrats. Another potential coalition partner are the Free Voters, a group comprising disaffected former CSU supporters that campaigns on mainly local issues such as schools and renewable energy.

The Social Democrats' lead candidate in the state, Franz Maget, said that he hopes to form a four-way coalition to unseat the CSU and plans to discuss the possibilities with the party leadership in Berlin today.

``We're not just talking about a state election result here but an earthquake in Bavaria that will be felt far beyond,'' said Foreign Minister Frank-Walter Steinmeier, the Social Democrats' acting leader who replaced Kurt Beck this month. ``Bavaria no longer belongs to just one party.''

Bavaria has been dubbed the land of ``laptops and lederhosen'' for what state boosters say is a successful meshing of economic development and tradition. Largely rural after World War II, its gross domestic product was $601 billion last year, more than Switzerland, Sweden or Saudi Arabia, according to the International Monetary Fund. Unemployment is 3.9 percent, almost half the 7.6 percent national rate.

Bavaria's Changing Face

The prospect of work has attracted people from outside the state, changing Bavaria's social make-up. The proportion of foreigners living in Bavaria, just 2 percent in 1962, is now 9 percent, or 1.1 million people, with Turks the biggest group.

The CSU attempted to broaden its appeal with a campaign calling for federal tax cuts worth 28 billion euros ($41.4 billion) starting next year. Merkel refused to go along, telling the CSU's annual convention in July that the package was unaffordable and would undermine plans to balance the budget.

Beckstein meanwhile alienated voters by enacting a ban on smoking in bars and restaurants that is among the strictest in Germany. That didn't go down well in Munich, the home of Oktoberfest, the world's biggest beer festival, which runs until Oct. 5.

Merkel's Party Drops

In separate local elections in the state of Brandenburg, Merkel's Christian Democrats lost 8.4 percent of the vote to place third after the Social Democrats and, in first place, the Left Party, Bild reported.

``We've had a bitter defeat,'' Ronald Pofalla, general secretary of Merkel's Christian Democratic Union, said on ARD television. ``We'll need to fight to win these middle-class voters back -- I'm convinced we can do it.''

The CSU's 50-year ``monopoly on all things Bavarian'' is over, the Free University's Nolte said. ``The state is not an island but is buffeted by the same global winds as any other region on the planet, and the CSU was found wanting.''

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

Last Updated: September 29, 2008 04:35 EDT