The disappointing results sent shock waves around the room at the socialist party's (SPD) headquarters in the Willy Brandt House. The party was not prepared for its worst result since the war – around 23%.
The centre-right CDU won a comfortable majority at 33.5% and the liberal FDP collected 14.5% of the vote, the best it has ever scored at national level.
The left-wing Linke received 13% of the vote and the Green Party achieved 10% - both personal bests on a national scale.
Voter turnout at 71.2% was the lowest it has ever been since the establishment of the federal republic, clearly beating previous record lows of 77.7% in 2005.
The Willy Brandt House is now the scene of a debate on overhauling the party from scratch. The SPD had been in government for eleven years. Now the party will have to renew itself as the opposition party.
The SPD's candidate for the chancellorship, Frank Walter Steinmeier, had set a modest yardstick for yesterday's vote at 25%.
Steinmeier spoke of a bitter defeat and said the party could not return to business as usual. The SPD would now become an opposition party that would observe whether the new government "is up to the job, and I have my doubts that they are," he said. The SPD would not allow a return to the 1990s under a black-yellow coalition (CDU/CSU/FDP).
Once the shock of defeat had settled, members of the party would not let Steinmeier speak. The room filled with frenetic applause as though the party was trying to console itself.
Steinmeier will now head up the SPD's opposition faction in the Bundestag, the parliament's lower house.
The SPD lost votes to the Linke, the Greens and the ever expanding number of non-voters. The fact that the SPD lost the greatest portion of its votes among the young electorate should serve as a wake-up call.
Chancellor Angela Merkel, the CDU leader, spoke an hour after the ballots had closed. There was no mention that the CDU had lost a considerable amount of voters, and the party once again espoused the winning chancellor and achieved its second goal, namely a coalition government with the FDP.
Diverging policies in new coalition
There are key policy differences, however, between Merkel's Christian Democrats (CDU), their Bavarian sister party, the Christian Social Union (CSU), and the FDP which will need to be hammered out as they strike a coalition agreement.
The FDP will not likely oppose tighter financial regulation, but if in doubt is more likely to stall any new measures rather than support them. It would like to see the state withdraw from the troubled banking sector as soon as possible.
The FDP would like to cut taxes by up to 35 billion euros - a much higher target than the CDU. But given Germany's budget deficit, it has little chance of achieving this. The CSU has rejected any cuts to social security in order to fund tax cuts.
The FDP is strongly opposed to CDU/CSU plans to deploy the German army in a domestic security role in support of the police. The FDP has rejected a number of security measures taken by the grand coalition of Merkel's conservatives and the centre-left Social Democrats (SPD) in the last four years, even taking its complaints as far as Germany's highest court. The FDP is strongly against keeping records of individuals' private computer activity.
Merkel has already ruled out the FDP's plans to make it easier to fire employees. The FDP would also like to replace the Federal Labour Office with a three-tiered model of regional job centres, benefit offices and a central employment agency. The FDP would like to completely overhaul statutory health care, introducing flat-rate health insurance contributions in place of insurance payments based on income.
The parties hold contrasting views on Turkey's accession to the European Union. The CDU opposes Turkey joining the bloc. The FDP says it is not against it, but that Turkey has not yet met the requirements for membership.
The CDU/CSU wants military service to continue, while the FDP would like to see a fully professional army.
On disarmament, the FDP wants to see the removal of all remaining US nuclear weapons from German soil.
(EurActiv with Reuters.)