German Chancellor Friedrich Merz is facing mounting unrest within his party ahead of two regional elections on Sunday, with some insiders warning that more poor results could hasten his departure from office. Merz has decided to skip next week’s UN General Assembly in New York and hold an emergency party meeting on Sunday evening as he seeks to contain the fallout from expected losses for the Christian Democratic Union in Berlin and the north-eastern state of Mecklenburg-Vorpommern.

Two weeks after the far-right Alternative for Germany won a shock victory in Saxony-Anhalt, where the CDU recorded its worst-ever result, Merz is confronted with a growing belief within his party that he has to depart in order to contain the damage. A change in chancellor only 16 months into his four-year term would send shockwaves across the EU, Nato and all the way to Ukraine, given that Merz’s government has been a steadfast ally for Kyiv and its biggest military aid donor in Europe.

A transitional period in Berlin would also come just months before presidential elections in France at the end of Emmanuel Macron’s 10-year presidency and as EU governments are locked in financial negotiations over the bloc’s next seven-year budget. Berlin’s Mamdani: Elif Eralp, Die Linke’s lead candidate for the regional election, could carry her far-left party to first place following a campaign that has harnessed anger over soaring rents and the insurgent far right.

In other top stories, Turkish authorities have frozen trading in funds run by seven asset managers and ordered 130 funds to be liquidated to contain fallout from a speculative bubble. France’s minority government aims to reduce the deficit with a €54bn savings drive. The Bank of Japan raised rates to 1.25 per cent, and cyber researchers broke into Open AI using Anthropic’s software.