Q&A: the German Election

Why is the election taking place now?

Because the current chancellor, Mr Schröder, the leader of the Social Democratic party and the chancellor since 1998, decided to gamble on an early, snap election, after a disastrous result for his party in a regional election earlier this year.

Under the German constitution, national elections take place every four year and would not normally be due until 2006, but Mr Schröder, despite his ruling coalition with the Green party having a narrow majority in the Germany parliament, the Bundestag, has engineered a vote of no confidence in his own government.

Why the snap poll?

In May, Mr Schröder's party, the SPD, crashed to defeat in elections in its traditional heartland, North Rhine Westphalia - the industrial Rhine valley, comprising the former capital, Bonn, Cologne and Dusseldorf, and the country's most populouss region, with 18 million voters. It had been governed by Mr Schröder's party for the past 39 years.

But, in fact, the difficulties for the party set in immediately after its national victory in 2002, when it came from behind in the polls to tie with the Christian Democrats, both parties receiving 38.5% of the vote. Mr Schröder was able to resume the chancellorship thanks to the strength of the Green party, which joined the SPD again in a '"red-green" coalition.

Most commentators put that surprise electoral comeback down to the chancellor's vocal opposition to the build-up to the war in Iraq and to his quick and effective handling of catastrophic floods around Dresden, in former East Germany, in the summer of 2002. The fact that these freak floods, which caused hundreds of millions of euros worth of damage, were attributed to climate change also helped the Greens, under Joschka Fischer, to outpoll Germany's other significant minor party, the Free Democrats, aka the Liberals.

However, since then Mr Schröder's attempts to scale down Germany's generous welfare system have seen his party's popularity plummet - without Germany's unemployment problem improving significantly. Unemployment is still just under five million - a level last reached in the 1930s.

Under the Agenda 2010 programme, consisting of reforms devised by Peter Hartz, the former head of Volkswagen, unemployment benefits were cut, the retirement age increased and employee protection weakened - resulting last year in a series of nationwide protests called for Monday evenings, in a deliberate echo of the demonstrations that helped to topple the former communist regime in the East.

So why call an election he looks likely to lose?

With the opposition Christian Democrat Union/Christian Social Union (CDU/CSU) having a majority in the upper house, the Bundesrat, which can block almost all legislation proposed by the government, and the extent of his own party's unpopularity dramatically demonstrated in the NorthRhine Westphalia election and the 2004 European elections, Mr Schröder apparently felt he was in government but not in power and unable to continue in office for another year or more.

Commentators have suggested he also hoped to gain some credibility and dignity from the electorate from such a move. They have suggested that, tactically, Mr Schröder was hoping the opposition would be split in its choice of a candidate to oppose him. The German equivalent to the Conservative party consists of two sister parties: the Christian Democratic Union, in the north and east of the country, led by Ms Merkel, and the Christian Social Union in Germany's most staunchly Catholic and prosperous region, Bavaria.

The CSU leader, Edmund Stoiber, having run a dead heat with Mr Schröder in 2002, was expected to fancy his chances again, but in fact the CDU/CSU immediately coalesced around Ms Merkel as their candidate.

Who will win in September?

It seems almost inconceivable that Mr Schröder could pull off another electoral comeback - opinion polls have his SPD trailing the CDU/CSU by up to 20%. That makes it almost certain Ms Merkel will head the largest party in the next parliament and be Germany's first female chancellor.

However, under Germany's proportional voting system, the devil is in the detail - that is, the strength of the smaller parties. Until recently Ms Merkel was polling over 50%, giving her an outright majority. That support has fallen to around 42% in the most recent polls, with the SPD at around 27%.

Recent precedent is that the CDU/CSU forms a coalition with the other centre-right party, the FDP liberals, and that the SDP hooks up with the Greens. However, this unofficial agreement has been thrown into disarray by the emergence of a new leftwing party. In June this year, the tiny former communist party of East Germany, the Party of Democratic Socialism (PDS), merged with the equally fringe west German socialist party the Labour and Social Justice party, a leftwing faction of the SPD that spilt off after the disastrous NorthRhine Westphalia elections. Together, under the Linkspartei banner and the co-leadership of two of Germany's most charismatic politicians, Oskar Lafontaine (ex-SPD) and Grygor Gysi (ex-PDS), they are standing on an anti-neo-liberal platform and pledging higher taxes on people earning more than 60,000 euros a year.

Despite being only a few months old, the party is already the third most popular in Germany, according to opinion polls, with nationwide support of around 12% - three points higher than the Greens - and a staggering 35% in the former East.

That popularity throws all the existing electoral calculations out of the window, with some commentators now speculating that Ms Merkel - unable to coalesce with the Greens or the Linkspartei for obvious ideological reasons and with the FDP failing to attract enough votes for outright victory - may be forced into what is known as a "grand coalition" with her party's traditional foes, the SPD.

There is a precedent - the two parties ruled together from 1967 to 1969 - but whether a fudge coalition between the SPD and the CDU/CSU would be as popular as either party governing separately, or have the strength to carry out their election promises, remains to be seen.

What would a Merkel chancellorship mean for the EU?

Both the British and German press have characterised Ms Merkel as "a new Maggie" - they are both women, rightwing and have backgrounds in the sciences. (Mrs Thatcher was a chemist, Ms Merkel a physics lecturer.)

However, the CDU leader would be unlikely to be such a free marketeer as Britain's first female prime minister. She has already pledged her support for the "social market", a German notion that prescribes greater welfare spending and worker protection than the Thatcherite model.

And, while more of an Atlanticist than Mr Schröder, Ms Merkel has already ruled out sending German troops to Iraq. She is more likely to be open to Tony Blair's suggestion, stemming from the stalled EU summit in Brussels in June, to reduce the French farm subsidies in the Common Agricultural Policy agreed upon by President Chirac and Mr Schröder and scheduled to remain in place until at least 2014.

Perhaps because she grew up in Soviet-controlled East Germany, Ms Merkel has also been morre vocal than Mr Schröder in her disquiet over developments in Russia, specifically President Putin's consolidation of power in the Kremlin. Mr Schröder enjoys a close relationship with the Russian leader.

Ms Merkel has already paid a "get to know you" visit this summer to France's interior minister, Nicolas Sarkozy, tipped to succeed to the French presidency in elections in 2007.

Mr Blair's supporters have predicted a triumvirate of the prime minister in alliance with these two centre-right leaders, heading a charge for reform of the EU in the wake of the French and Dutch referendum rejections of the constitution.

A byproduct of a Merkel victory in September would be the disappearance from the international stage of Joschka Fischer, the Green foreign minister under Gerhard Schröder and regularly voted the most popular politician in Germany.