But while the leadership vacuum has become apparent in Germany, questions are now being asked over the future of Europe once Merkel, a well-regarded pragmatic and principled leader, departs the post. With populist politics de riguer in Europe at the moment, there are concerns the departure of a strong leader like Merkel opens up the region to more extremes and divisions in the political sphere.
Niall Ferguson, an historian and senior fellow at the Hoover Institution at Stanford University, told CNBC on Monday that "we have a vacuum in German politics and therefore a vacuum at the heart of European politics and that will continue to be the case until Chancellor Merkel has ceased to be chancellor and has made way for a successor."
A weaker Merkel has immediate ramifications for Europe. It could stymie plans for reforms in Europe that are intended to bring the euro zone closer together, such as the creation of a common budget, that are being pushed by French President Emmanuel Macron. Likewise, it could change the course of Brexit negotiations and arguments between Italy and Brussels over spending.
"Angela Merkel and the German government used to be a beacon of stability for Europe," the DIW's Fratzscher said.
"The problem is we already see a weakness in the German government that does not bode well for Brexit – there will not be a strong German voice pushing for British interests. It won't bode well for Italy which needs European help at the moment. So that's my worry, this reliability of Germany and its government is no longer there to the extent that it was in the past."
Although the euro fell 0.2 percent as markets digested news of Merkel's departure, Lutfey Siddiqi, visiting professor at the London School of Economics, told CNBC's Capital Connection that Merkel's departure means "there is another source of structural uncertainty for markets at a time when we're not short of sources of uncertainty," he said, mentioning Italy's budget woes and the conclusion of the European Central Bank's asset purchase program expected in December.