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Socialist Schulz loses early momentum in German election race

Uncertainty seems to be hitting another key election in Europe – the German vote due in September.

A couple of months ago Chancellor Angela Merkel seemed on courses to win her fourth term leading the largest euro economy. But that changed once the opposition chose former head of the European parliament Martin Schulz to represent the socialist party (SPD) in the elections. While his experience and personality appear to have given an early boost, Schulz's campaign seems to be losing momentum.

A poll for the broadcaster ZDF released Friday showed a reversal of fortunes with Angela Merkel's party ahead of Schulz with 34 percent of the vote, against 32 percent given to the socialists. The previous surveys had given the lead to Schulz.

"Schulz has definitely changed the game in the German election. He's still benefiting from the entry boost," David Lea, senior Europe analyst at Control Risks told CNBC on Friday.

"Whether that boost can be sustained for the six months, little bit over, left until the election, I doubt it somehow but he is certainly trying his best," Lea added.

However, in terms of popularity, both Merkel and Schulz achieved 44 percent of support in the ZDF poll.

Analysts believe that a Germany led by Schulz would be very different from the one we currently have.

Alan Higgins, chief investment officer at Coutts, told CNBC on Friday: "If Schulz gets in, it's going to be a big change, old-style SPD, spending investment, very pro-euro."

Schulz has said he wants to overhaul Germany's labor market and welfare system – areas that economists say have contributed to the strong economic performance of Germany.

But recent data has questioned the stability of the German economy. On Friday, figures showed Germany's trade surplus dropping to a 12-month low. The trade balance dropped to 14.8 billion euros from 18.7 billion euros in January from the previous month.

"The race between Merkel and Schulz remains open," Jörg Krämer, chief economist at Commerzbank told CNBC via email.

"For the first time in many years Merkel faces the risk of losing the chancellorship. Schulz managed to de-mystified Mrs. Merkel after her popularity had suffered during the refugee crisis," he added.

Lea from Control Risks added that the emergence of Schulz in the German election makes a "more interesting SPD and CDU battle"

Looking at the support for far-right - one the main concerns regarding the election calendar in Europe - the anti-immigrant Alternative for Deutschland placed third with 9 percent of the vote share in the ZDF poll.

However, Lea warned against scenarios that replicate the anti-establishment sentiment seen in Britain and the U.S.

"The extreme groups have done fairly well in state elections and in municipal elections but they've never been able to push it through in national elections. There is a danger in simple extrapolating a Brexit result or a Trump result to every country Europe," he said

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