BRUSSELS • European Parliament president Martin Schulz is returning to German politics, raising the prospect he may challenge Dr Angela Merkel as chancellor and prompting speculation of a reshuffle in European Union institutions.

Mr Schulz told a news conference he would not stand for re-election as Speaker of the EU legislature and instead campaign for a seat in Germany's federal Parliament next year.

He made no comment on speculation he may succeed departing Foreign Minister Frank-Walter Steinmeier or become the Social Democrat candidate to challenge conservative Chancellor Merkel's bid for a fourth term in September's parliamentary election.

Mr Schulz, 60, had been pushing for a third 30-month term as EU Parliament president in defiance of a deal that he make way for a Speaker from the centre-right, the chamber's biggest group.

Should the conservatives, who have formed an effective grand coalition in Brussels with Mr Schulz's centre-left, claim the presidency in January, all three main EU political bodies would be headed by the centre-right - a possibility that has raised talk of change at the European Commission and European Council.

Commission president Jean- Claude Juncker had pressed his fellow conservatives in Parliament to let Mr Schulz stay on in the interests of stability following Britain's vote in June to leave the bloc. He denied threatening to resign if Mr Schulz were forced out but said yesterday that he "regretted" him leaving.

Mr Juncker, from Luxembourg, has a five-year mandate running until October 2019. Council president Donald Tusk, the former Polish prime minister who will chair Brexit negotiations, has a 30-month mandate that expires in May.

He has broad support among member governments to stay on - though not from his home country, where his opponents are now in power. He has not publicly stated whether he plans to continue.

REUTERS