German elections are a 'close call': Merkel

Chancellor Angela Merkel said the German elections in September were a "very close call" and that it would be foolish to see the result as a foregone conclusion, despite her Christian Democratic Union (CDU) leading the polls.

"I am indeed sure of the fact that the elections will be a very, very close call. It would be extraordinarily careless to think I'll be re-elected chancellor in any case and don't need to do anything about it anymore," she told Germany's ZDF television on Sunday.

"I am campaigning to be chancellor for another four years and in the next five weeks I will put all my effort into making that possible," she added.

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Merkel vowed to increase spending on infrastructure, education and increasing employment and said she would not consider forming a grand coalition with her rival in the Social Democratic Party (SPD), Peer Steinbrueck.

She might not need to as her party leads the polls ahead of elections on September 22.

Fifty-four percent of people would vote for Merkel if they could directly elect their chancellor while only 23 percent of Germans would vote for Steinbrueck, according to a Forsa poll published last Wednesday.

Steinbrueck, a former finance minister, addressed a large crowd in Berlin on Sunday saying he would give political direction to the country as he tries to narrow a 15 point gap between his party and the CDU.

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"The political stand still of this government is weakening Germany because not enough is invested in the future, because this country is just being administrated (or managed) and not politically shaped," he told crowds gathered near the Brandenburg Gate.

Steinbrueck called for higher taxes "for some" in Germany and said the country needed to develop a rescue plan for the euro zone. Merkel, on the other hand, denounced tax increases saying they could come at the expense of German jobs.

"You can't really imagine a Germany without a Merkel at this time of the European debate," Richard Harris, chief executive of Port Shelter Investment Management told CNBC Europe's "Squawk Box." "Angela Merkel is probably the only leader left from 2008 who's still there and likely to win another election. Merkel seems to have a great deal of personal popularity, she's known as 'Mum' in Germany, people seem to trust her and that will carry through to the markets too."

(Read more: Is Germany in 'cloudcuckoo land' over Greek debt?)

The straight-talking Steinbrueck might have less personal appeal for the German people than the maternal pull of Merkel, but the leader of Steinbrueck coalition partner, the SDP party in the North Rhine-Westphalia region in Germany told CNBC that the election race was not over yet.

"In all of the elections in the German [regions] it has always been that we have no chance to win and in the last weeks we definitely got through and then we won. That was in North Rhine-Westphalia and that was in several other [regions]," Hannelore Kraft said. "So we know that what we see now in the media is not what we will see in the end, so we'll fight for every vote."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld