Lars Klingbeil: The new finance minister must now solve these problems

Lars Klingbeil, Co-Chairman of the SPD, is to become Vice Chancellor and Finance Minister. As a vice-chancellor, the 47-year-old would have the second most important position in the cabinet-according to the designated Chancellor Friedrich Merz (CDU).

As a finance minister, he would also have a lot of responsibility. Klingbeil must remove the legacy of the traffic light government and make Germany future-proof. Three problems are particularly urgent.

Klingbeil’s first major task is a heir to the traffic light: he quickly has to present a draft budget for 2025-and shortly afterwards also one for 2026. The traffic light government had disputed about the household for 2025 and finally broke after ex-finance minister Christian Lindner (FDP) by Chancellor Olaf Scholz (SPD). Therefore, only a preliminary housekeeping applies. The federal government is severely restricted in its actions until there is a decided budget for 2025.

So Klingbeil has to hurry up. His party friend, the previous Bundestag Vice President Bärbel Bas, already demanded that the budget be decided before the parliamentary summer break. The best thing is in a package with the 2026 household.

That would be very demanding. Budget planning is about how the tax revenue is used. And above all, it must be prioritized which projects can be financed and which are not. A large gap gaped in all designs of the traffic light government. The reforms that the old Bundestag has decided in winter will help Klingbeil.

Because the main problem of the traffic lights is solved: it is now possible to spend more money for defense, whether this will have to save elsewhere. Defense spending above one percent of gross domestic product are exempt from debt brake.

Another advantage of the new finance minister: He takes over the position of party friend Jörg Kukies, who has probably prepared the change well and will support Klingbeil without reservation at the start. “My mission of the past two months and next two weeks is to do the preparatory work that the next government will quickly come to Potte,” said Kukies at the sidelines of the spring meeting of the International Monetary Fund in Washington.

If things go well, the household could be a to-do that Klingbeil can tick off quickly. In comparison, a different problem seems much larger: the weakening German economy. In 2024 the gross domestic product (GDP) has shrunk by 0.2 percent, the second year in a row.

Klingbeil seems to be aware of his responsibility in this regard. In a letter to the SPD parliamentary group last week, he emphasized that “an economic turnaround for new growth, a strong industry and safe jobs” was necessary.

In the Ministry of Finance, the SPD “in particular can advance and implement the large financial package with the special fund of infrastructure,” wrote Klingbeil. As finance minister, he wanted to tackle this task “with great determination”.

A special fund is a loan that the German state takes and which is independent of the household. The special fund infrastructure was decided in March 2025 with the reform of the debt brake.

With the 500 billion euros in special funds, the country must be “systematically” modernized, said Klingbeil. Specifically, the funds should flow into the following areas:

But it is precisely this “flowing” that sounds easier than it is. In order for the money to be spent sensibly, some structural problems in the area of ​​approval and award procedures have to be solved.

The procurement of the funds lies with the finance agency, whose control body is the Ministry of Finance. Klingbeil must therefore keep an eye on the costs for the special fund and is also intended as its administrator.

In addition to household and growth, Klingbeil has a third big task: finance the plans of the coalition agreement. The planned relief of the new black and red coalition adds up to more than 50 billion euros per year with complete implementation, the Institute of German Economy (IW) calculated.

Many projects are subject to financing. However, if it becomes clear that a large part of it is not implemented, this would massively harm the credibility of black and red. And if you fail because of the lack of money, this is particularly damaged by the finance minister: Lars Klingbeil.

Although the debt brake can help, the new finance minister simply cannot spend wild money. So how will he explain to his party colleagues that not all their wishes are fulfilled?