German Chancellor Angela Merkel may have given the finance ministry to her Social Democrat (SPD) coalition partners but Berlin is not putting its finances at risk, a former lawmaker told CNBC Tuesday.
Michael Fuchs, a former member of parliament with Merkel's Christian Democratic Party (CDU), said he is optimistic that Germany's finances will continue to be run efficiently.
"In the coalition contract, which we do have at the moment, it's very clearly stipulated that there will be no new debt at all," Fuchs said. "Like we did in the last four years, we've run the budget result without any debt and we want to continue to do so.
"So I am quite positive there will not be too much change."
The SPD's Olaf Scholz has been tipped as Germany's next finance minister, following last week's coalition agreement between the CDU and SPD.
The deal saw Merkel give three of the most influential ministries to the SPD, including the helm of the country's finances — raising doubts whether Germany would lose its fiscal discipline.
In 2017, Germany registered the highest current account surplus in the world, according to data from the Ifo economic institute. Institutions such as the International Monetary Fund (IMF) and the European Commission have urged Germany to invest more and boost economic activity.
According to Fuchs, the new coalition government is unlikely to change its fiscal policy. However, a new finance minister represents a change in tone towards the euro zone.
Scholz told Der Spiegel over the weekend that Germany "doesn't need to dictate to other European states how they run themselves." Berlin's previous finance minister, Wolfgang Schauble, often criticized countries in the euro area, including Greece and other bailout countries, for not following a sound fiscal policy.
Nonetheless, the next four years are not going to be easy for Chancellor Merkel, Fuchs said, amid the rising support for populist parties and the need to find a potential replacement for Merkel, who is set to start her fourth mandate in the chancellery.
"We have to face the reality and the reality is that now we have another grand coalition," Fuchs said, pointing out that both the CDU and the SPD have lost support in recent years and have become "much smaller."
"Merkel is 62 years old now, plus four, makes it up to 66 years and I guess then at the end of this term, we will see a new leader in the CDU," Fuchs said, noting that it's "very difficult" to see at this point who could replace Merkel.