Klingbeil appoints Jens Südekum: New advisor for economics and reforms!

Klingbeil appoints Jens Südekum: New advisor for economics and reforms!

Federal Finance Minister Lars Klingbeil has appointed Jens Südekum as “personal representative for overall economic development”. Südekum will advise the minister on macroeconomic strategy issues and will continue to work as a professor of international economics at Heinrich Heine University in Düsseldorf. However, this new role is not considered an employment in the ministry, as Südekum is independent and voluntary and directly assigned to the Minister of Finance. Economist Lars Feld previously held this position for former Finance Minister Christian Lindner.

Südekum is already known as a co-creator of the important 500 billion euro special fund, which is crucial for the investments and structural reforms that should quickly have an impact. The new personal representative could therefore be a key figure in the coming economic reforms.

Explorations into the debt brake

One of the current economic challenges is the issue of the debt brake. The CDU/CSU and SPD have abandoned the old debt brake, which is causing a stir in the political discussion. This was discussed at a meeting initiated by Jakob von Weizsäcker, which Südekum also took part in. Other participants were Clemens Fuest, Moritz Schularick and Michael Hüther. The aim of this meeting was to draw up minutes and forward them to the exploratory group.

The resulting document lists two main points: a 500 billion euro special fund for infrastructure and another 400 billion euro special fund based on NATO objectives and earmarked for military spending. These measures are intended to help address investment backlogs. But reforming the debt brake remains difficult due to the current political situation. A two-thirds majority is necessary, which makes implementation more difficult.

Political reactions and future prospects

The Left is signaling a rejection of increasing defense spending, while there are a total of four different proposals to reform the debt brake, but no consensus has been reached. In the future, Chancellor Merz plans to approach the left to discuss possible reforms.

The Grand Coalition (GroKo) had previously excluded military spending over 1 percent of GDP from the debt brake, which met with resistance from some parties. Commissions to reform the debt brake are to take action in the next legislative period.

The first simulation results for implementation show positive prospects, with a planned fiscal stimulus of a total of 500 billion euros over a period of ten years, which promises an amount of 50 billion euros annually. The aim is also for countries to contribute 0.35 percent of GDP, which corresponds to around 15 billion euros. The defense ratio could be up to 3 percent, with 2 percent to be financed by loans. Overall, there is a fiscal stimulus of around 150 billion euros annually, which corresponds to 3.5 percent of GDP.

These developments show that the appointment of Jens Südekum heralds an interesting phase of economic realignment in Germany, the success of which will be crucial in future political cooperation.