Germany’s anti-nuclear Greens scored a remarkable victory over Chancellor Angela Merkel’s conservative party in a state election that turned into a referendum on nuclear power in the wake of Japan’s Fukushima disaster.

Chancellor-designate Angela Merkel today defended her coalition’s programme of hefty tax hikes and benefit cuts as the right action for creating jobs, stimulating growth and putting Germany back among Europe’s top three countries.

GERMANY’S Greens have agreed to hold talks on forming a new government with Angela Merkel’s conservatives after a leading member of Merkel’s party called a link with the environmentalist group “a realistic option”.