Monika Schnitzer, the chairwoman of the Council of Economic Experts, has called on the newly appointed Federal Finance Minister Lars Klingbeil (SPD) to quickly establish the federal budget. “The most important task is now to quickly set up a federal budget” she said in an interview with the “Welt” (Thursday edition). Given the reshuffling of the ministries, this is no easy task.
“It is also important to ensure that the additional room for maneuver resulting from a reform of the debt brake and special funds is used in a forward-looking and growth-promoting manner” said Schnitzer. “This also means saying no to ‘nice-to-have’ wishes, regardless of which faction they come from.” Much negotiation skill is required in this regard.
That Klingbeil has no experience with budget and tax issues is not seen as a major disadvantage by Monika Schnitzer, who holds the chair for Comparative Economic Research at the Ludwig-Maximilians-University in Munich. “What is decisive is to rely on experienced state secretaries who are familiar with federal and EU affairs” she said.
Friedrich Heinemann, head of the Public Finance department at the Leibniz-Zentrum für Europäische Wirtschaftsforschung (ZEW), calls on Klingbeil to tighten expenditure control. “He must regain control over the growth of social expenditures” said Heinemann. A quarter of every euro in the budget goes into the pension system. “New debts after the constitutional amendment will not solve the financing problems if there is not a reduction” he said. Klingbeil will have to put pressure on social policymakers – including in his own party – to reduce costs in pensions, health and care.
Jens Südekum, an economics professor at the University of Düsseldorf and member of the SPD, expects Klingbeil to make clear statements to his coalition partners. “For many of the desired projects, such as expanding the mother’s pension, there will not be any money available initially” said Südekum. This must be explained to his coalition partner Markus Söder (CSU).