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Here are the contenders for the most powerful finance job in Europe

Key Points
  • On Monday, Merkel told a joint news conference with the CSU's leader that the parties would begin coalition talks with the Free Democratic Party (FDP) and Greens next Wednesday.
  • The FDP could be in line to put one of its party members at the top of the German finance ministry.
  • The new finance minister will dictate the economic direction of Europe's largest economy and have a large influence over the euro zone.
The chairman of Germany's Free democratic party FDP Christian Lindner faces photographers and cameramen as he arrives for a press conference on Sepbember 25, 2017, in Berlin one day after general elections. The pro-business and liberal Free Democratic Party (FDP) scored a 10.7- percent comeback after crashing out of parliament four years ago.

With the departure of Wolfgang Schaeuble as the German finance chief following the federal election last month, political analysts and economists are busy profiling the possible next head of the country's finance ministry.

Angela Merkel's Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU) won the largest share of the vote in a federal election last month, " On Monday, Merkel told a joint news conference with the CSU's leader that the parties would begin coalition talks with the FDP and Greens next Wednesday. She added that on Friday October 20, the first round of "exploratory talks with all partners" would begin, Reuters reported.

The new person will not only dictate the economic direction of Europe's largest economy but will have a large influence over the euro zone itself. Here, CNBC highlights the prime candidates for the role and what impact they could have.

Christian Lindner —leader of the Free Democratic Party (FDP)

As the leader of the FDP, which is expected to become the coalition partner of Merkel's CDU-CSU and Greens coalition, Lindner has been tipped as a likely candidate to take the finance ministry. The 38-year-old is largely the "face" of the FDP and has political weight because of his high profile. He is known for his pro-business but anti-euro zone integration stance, meaning any tenure of the finance ministry could see the department continue to resist more plans – from Macron and supported by Merkel – for closer economic union in the euro zone.

Carsten Nickel, managing director of Teneo Intelligence, told CNBC that Lindner might prefer to lead the FDP in parliament rather than taking a cabinet post under the aegis of Merkel.

"There is speculation that Lindner could stay out of it altogether, preferring a stronger profile outside of the government," Nickel said, adding: "The FDP's election campaign focused on personality too, particularly on Lindner but whether that is enough to lead the finance ministry and become the de-facto leader of the Eurogroup (the group of euro zone finance ministers) I'm not sure."

Alexander Graf Lambsdorff

Another possible contender for the role is Alexander Graf Lambsdorff, who is vice-president of the European Parliament and a member of the FDP too. The 50-year-old is seen as part of a political dynasty — his uncle was economy minister in the late 1970s and early 1980s — and Lambsdorff himself has served as a member of the Bundestag and European Parliament, thus knows Brussels' corridors of power well.

Nickel believes that Lambsdorff would be a "very good choice" for finance minister.

"Although Lambsdorff has had no experience in government, you could say you need someone in the finance ministry who knows Brussels and its institutions and speaks several languages," Nickel said, adding, "He has the relevant contacts and could act as a bridge between Europe and the liberal base in Germany."

Wolfgang Kubicki

Another strong contender for the finance minister post is Wolfgang Kubicki who, at 65, is also a long-standing member of Germany's political establishment. As the vice-chairman of the FDP, he is also only second in command to Lindner at the top of the party. Nickel noted that Kubicki's strongest card is that he has experience of government at a regional level.

"It's normal in Germany for ministers to have usually served at a regional level and Kubicki is a bit older, he's a seasoned experienced politician."

Other contenders?

While the FDP's party members are seen as the likeliest contenders for the finance ministry role, it's not impossible that the CDU could keep the position for one of its own, according to Nickel.

"An outlier (candidacy) is that you strike some sort of deal and the job is left with the CDU, and that's something I still wouldn't rule out," Nickel said.

An CDU-originated candidate could come in the form of Ursula von der Leyen, the only female contender currently. Von der Leyen is no stranger to ministerial positions as the incumbent minister of defense (the first woman in German history to hold that office). She has also held other ministerial posts in recent years.

Another name that has been mentioned is the European Investment Bank's (EIB) President Werner Hoyer. However, he told reporters at the end of September that he was "extremely happy" at the EIB and was "looking forward to another six years at the bank," Reuters reported.

"Not least given his experience at the EIB, a Ministry of Finance under Werner Hoyer in particular might be expected to take forward in a constructive way some of the elements of euro area reform proposed by (French President Emmanuel) Macron, including selected budgetary initiatives," Chris Scicluna, executive director and head of economic research at Daiwa Capital Markets, told CNBC on Monday.

Why this is happening and why it matters

It's traditional in Germany for the junior coalition partner – in this case, likely to be the FDP – to choose a government ministry it wants to lead. The FDP are known as advocating free market policies, privatization and civil liberties and are seen as right of center, with a pro-business ethos as a central tenet of its manifesto. The finance ministry is seen as the most likely department to be chosen.

As such, – a respected figure in Germany and keen promoter of pro-European values but also austerity and fiscal discipline within the euro zone – has been widely seen as preemptive of the FDP's taking-over of the ministry

For his part, Schaeuble will take his many years of experience in office to become president of the Bundestag, Germany's parliament. In the meantime, Peter Altmaier, chief of staff of the German Chancellery, a trusted right-hand man of , is heading up the finance ministry. Whoever takes the role as next finance minister of Germany matters not only in the country itself – Germany is the largest euro zone economy and is seen as the motor of the single currency area – but beyond.

Schaeuble was keenly pro-European but he had voiced misgivings about proposals by Macron, in favor of more economic integration in the bloc, namely with a euro zone finance minister and euro zone budget. So whether the next German finance minister adopts that view – which could ultimately prove a large obstacle to Macron's plans — will be watched with interest.

Finance Minister Wolfgang Schaeuble (CDU) arrives for the weekly German federal Cabinet meeting on February 1, 2017 in Berlin, Germany.
Adam Berry | Getty Images

Schaeuble's legacy

Whoever the candidate, "there'll be no significant softening of opposition to Germany underwriting fiscal policies elsewhere in the euro area," according to Scicluna.

"Overall, despite the FDP wanting to present itself as representing a change for the finance ministry, I would expect to see broad continuity in fiscal policy regardless of who among its members leads it. So, the Black Zero (a nickname for Germany's balanced budget goal pursued by Schaeuble) balanced budget will remain first and foremost among the fiscal objectives, with everything subordinate to its maintenance," Scicluna said.

"The strength of Germany's current cyclical upswing — and the knock-on effect on tax revenues — should however give some room for maneuver. There'll also be no significant softening of opposition to Germany underwriting fiscal policies elsewhere in the euro area," he added.

The analysts felt certain that Schaeuble's legacy — that of enforcing fiscal discipline in the euro zone — was bound to live on whoever his successor proved to be. "In terms of policy, the German finance ministry is basically the European affairs ministry in Germany and the focus will still be focused on not giving away one pesky euro to Greece," Nickel said.

"There will be no let up for poorer euro zone countries. Merkel has committed to building out the euro zone but I imagine the new finance minister won't get involved in that."