The CDU/CSU bloc won 25 per cent of the vote, their weakest result in a post-war federal election and on a par with the centre-left Social Democrat (SPD), the infratest poll for broadcaster ARD showed. Other exit polls showed the SPD marginally ahead.
"That hurts," CDU General Secretary Paul Ziemiak told ARD after publication of the exit polls.
Attention will now shift to informal discussions - likely with the Greens, on 15 per cent, and liberal Free Democrats (FDP), on 11 per cent - followed by more formal coalition negotiations, which could take months, leaving Merkel in charge in a caretaker role.
After a domestic-focused election campaign, Berlin's allies in Europe and beyond may have to wait for months before they can see whether the new German government is ready to engage on foreign issues to the extent they would like.
Merkel has been in power since 2005 but plans to step down after the election, making the vote an era-changing event to set the future course of Europe's largest economy, according to Reuters.
The election pitted Armin Laschet, of the CDU, against Olaf Scholz of the SPD, the finance minister in Merkel's |grand coalition" who won all three televised debates between the leading candidates.
Both the conservatives and the FDP reject a European "debt union" and want to ensure that joint European Union borrowing to finance the bloc's coronavirus recovery package remains a one-off. The SPD has talked about taking steps towards a fiscal union.
The Greens favour a common European fiscal policy to support investment in the environment, research, infrastructure and education.
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