Merkel faces anger in own party after vote debacle

German Chancellor and leader of the Christian Democratic Union (CDU) Angela Merkel addresses the media in Berlin, May 10, 2010.

BERLIN (Reuters) - German Chancellor Angela Merkel drew fire on Wednesday from some leading conservative allies, rattled by humiliating losses in a regional vote, who accused her of failing to show leadership and set clear priorities.

Merkel has taken the blame for a 10 percentage point slump in support for her conservatives in Sunday's vote in North Rhine-Westphalia (NRW), Germany's most populous state, which has cost her majority in the upper house of parliament.

She also faced criticism for agreeing to an international $1 trillion package to protect the euro on top of a commitment to fork out some 22.4 billion euros for aid to debt-ridden Greece.

Although no one is seriously questioning her position, a clutch of senior conservatives expressed discontent with her government's record and said she had to show more mettle.

"Mrs Merkel, take the initiative," said Stanislaw Tillich, Saxony state premier. His comments were echoed by Stefan Mappus, Baden-Wuerttemberg state premier, who said there was broad discontent about the way Berlin governed in the last six months.

Infighting between Merkel's conservatives and her Free Democrat (FDP) partners has dogged the coalition in its first six months in office and a fierce debate about the euro zone debt crisis has dominated the political agenda this year.

Merkel had shelved her main policy priorities -- tax cuts, health reform and extending the lives of some nuclear plants -- until after the NRW election for fear of a voter backlash.

Now, with a majority for her centre-right coalition in the Bundesrat upper house gone, she could struggle to deliver her programme as she will have to rely on opposition party support.

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On Monday, Merkel ruled out tax cuts due to a tight budget situation, effectively abandoning one of the main platforms of her coalition deal and angering Germans already resentful about forking out for debt-ridden euro states.

"The refusal to cut taxes is the end of the CDU's growth oriented policies," Josef Schlarmann, head of the CDU's association for small and mid-sized firms, told the Rheinische Post, adding Merkel's coalition was heading for a brick wall.

But pressure is also coming from the CDU's conservative wing to tighten the purse strings. Roland Koch, heavyweight state premier of Hesse, slammed Merkel's government for indecisiveness and urged it to cut spending on childcare and education.

Merkel's position is not in doubt for now, not least because she has no obvious successor and it is in the interests of both her conservatives and the FDP to continue the coalition.

However, fears about the health of Finance Minister Wolfgang Schaeuble are another headache for Merkel and speculation is rife she will replace him. That would deprive the cabinet of one of its most savvy and experienced politicians [ID:nLDE6491MO].

On the upside, Merkel can draw some comfort from data showing Europe's biggest economy unexpectedly grew in the first quarter of 2010, suggesting a sustainable recovery may be afoot.

"We expect the German economy to rise like a phoenix from the ashes in the second quarter," said UniCredit's Andreas Rees.

(Editing by Charles Dick)