Working from home potential only half fulfilled in Germany. Is there a productivity paradox?

Jochen Moebert, Marc Schattenberg

Talking Point

Topic:

Macroeconomics

Analyst:

Online PDF 161k

We compare the current debate with the discussion about the introduction of the computer in the 1980s. Then as now, positive and negative effects on a macroeconomic level could almost cancel each other out at first. Accordingly, we anticipate that the question of productivity is only likely to be answered in some years’ time. [more]

Deutsche Fassung ➜

CDU/CSU manifesto: A programmatic umbrella for a catch-all party

June 21, 2021

Region:

Economic and european policy, Germany's super election year 2021

Topic:

Analyst:

Germany Blog

At last, the Conservatives revealed their 140-page election manifesto earlier this afternoon. The manifesto is centered on the key themes of stability and, as Laschet put it, “the triad of climate change, economic strength and social security” in a modernised state. The Conservatives (faithful to their name) thereby differentiate themselves from the Greens’ focus on faster change and transformation. We provide a summary of the key messages regarding EU, fiscal and climate policies in our note. [more]

The return of big government spending: Will this time be really different?

June 21, 2021

Region:

Germany's super election year 2021, Macroeconomics

Topic:

Analyst:

Sebastian Becker

Since the start of the COVID-19 pandemic the US has launched fiscal packages worth USD 5.3 trillion (25.5% of GDP). With new fiscal plans in the pipeline the total stimulus could even exceed USD 9 trillion (or 40% of 2020 GDP). Although the success of this bold US experiment is far from certain, it has started a new trend in fiscal policies. As low interest rates have depressed governments’ interest bills – despite surging debt – many observers advocate to make greater use of deficit spending for funding a public investment campaign over the next decade. Given weak growth prospects, restoring debt sustainability seems a Herculean task for high debt countries. But even some “fiscally prudent” countries like Germany face severe fiscal challenges due to rapid population ageing. [more]

German office market: Traditional office will remain at the centre of economic activity

June 17, 2021

Region:

Jochen Moebert, Marc Schattenberg

Topic:

Real estate

Analyst:

The demand for office space will be largely shaped by the development of home office over the decade. There is no doubt that remote work has the potential to reduce demand for office space substantially and uncertainty remains unusually high. But our projections show that even with a strong expansion of home office, demand for office space could remain high. We continue to expect that the traditional office will remain the hub of economic life. [more]

Greens’ convention – closing the ranks but little new impetus

June 14, 2021

Region:

Economic and european policy, Germany's super election year 2021

Topic:

Analyst:

Germany Blog

For the Greens, the goal of leading the next government seems to have become harder to reach over the last couple of weeks as polls suggest a certain disenchantment of the electorate with the party and its frontrunner. We do not expect the just approved election manifesto (more left than centre) to provide them with enough momentum to switch back into offensive mode in the election campaign. Still, the Greens can still regain momentum over the next few months, for example due to a hot summer, the resurgence of climate protests and a public perception that change is a precondition to modernization. [more]

Insights from corporate Germany on key election topics

June 14, 2021

Region:

Economic and european policy, Germany's super election year 2021

Topic:

Analyst:

What is corporate Germany’s view on key election topics? A conservative-green government would be a novelty in German coalition history. Ahead of this critical political and economic juncture a lot is at stake for German corporates (e.g. energy prices in the context of climate policies, exit from state support, active industrial policy). Our proprietary survey offers unique insights into what 200 German companies are thinking. [more]

Midyear review: Real economy on track, but higher inflation

June 10, 2021

Region:

Banking and financial markets, Economic and european policy, Germany's super election year 2021, Macroeconomics, Real estate, Sectors and resources

Topic:

Analyst:

Barbara Boettcher, Eric Heymann, Jan Schildbach, Jochen Moebert, Marc Schattenberg, Marion Mühlberger, Sebastian Becker, Stefan Schneider

Q2 GDP should be o.k., despite April’s little stumble. Strong external demand and depleted finished goods inventories suggest a strong bounce back once current supply constraints ease. Consumers’ economic outlook and income expectations are improving. Together with an expected normalization of the savings rate that should provide a strong underpinning for consumption growth. We stick to our Q2 GDP forecast of close to 2% qoq and 4% for the whole year. The rate of inflation has been rising sharply since the start of 2021. With price dynamics continuing to outstrip expectations and given the prospect of stronger economic recovery in the summer, we now expect the annual average CPI inflation rate to rise to 2.8% in 2021, monthly numbers could even touch 4%. [more]

Social cohesion top priority as no. of ICU patients drops sharply

June 4, 2021

Region:

Topic:

Analyst:

The third COVID-19 wave in Germany is ebbing. The number of ICU patients – one of the key parameters of the pandemic – peaked at the end of April, at above 5,100 cases. At the end of May the number was below 2,500. If the trend continues due to vaccinations and warm weather, the number of ICU patients will fall below 1,000 in mid-June. [more]

State elections: Eyes peeled for AfD’s scoring, little impact on federal race

June 2, 2021

Region:

Economic and european policy, Germany's super election year 2021

Topic:

Analyst:

Germany Blog

Next Sunday’s regional election in the small eastern German state Saxony-Anhalt is the last electoral test in the run-up to the federal election in September. Polls suggest that the CDU will remain the strongest political force, despite being challenged by the right-wing AfD. Even a narrow win would be a positive for the CDU’s federal campaign. Whereas an AfD victory would be a (non-lethal) blow for Laschet’s election campaign. The federal election campaign is just heating up. The electorate seems a little disenchanted with Greens and their chancellor candidate, allowing the Conservatives to regain the lead in the neck-and-neck race in the polls. Still, the two parties are polling too close to speak of a turning point (yet). [more]

Climate change ruling by the German Federal Constitutional Court: Calling for technological progress

May 11, 2021

Region:

Sectors and resources, Sustainability

Topic:

Analyst:

Eric Heymann

Talking Point

The Federal Constitutional Court's "climate change order" has the potential to trigger considerable political and social disruption. The greenhouse gas emission reduction targets set by policymakers will have implications for our everyday lives. Political and social resistance appears inevitable. We need better climate technologies. Better technology is key if we want to keep climate-related restrictions to individual freedom as well as political and social tensions as low as possible, both now and in the future. Perhaps we should regard the Court order as a call for much higher investments in research and development. [more]

Economy ready for take-off – election polls hanging in the balance

May 7, 2021

Region:

Economic and european policy, Germany's super election year 2021, Macroeconomics

Topic:

Analyst:

Barbara Boettcher, Jochen Moebert, Marc Schattenberg, Marion Mühlberger, Stefan Schneider

The catalysts for a strong expansion of the German economy during the summer half are falling into place: Global demand is picking up strongly and the vaccination momentum is finally accelerating. Given the slightly smaller than expected drop of Q1 GDP (-1.7%) and upward revisions to H2 2020, we have lifted our GDP forecast for 2021 from 3.7% to 4.0%. Meanwhile election polls are hanging firmly in the balance. The nominations of Annalena Baerbock and Armin Laschet as chancellor candidates have clearly helped the Greens to gain ground. The current shift in voters’ sentiment allows for a whole bunch of coalition options. [more]

Tipping the scales in a tight election – post-Covid boom to come just in time?

May 4, 2021

Region:

Economic and european policy, Germany's super election year 2021

Topic:

Analyst:

Barbara Boettcher, Marion Mühlberger, Stefan Schneider

Given the magnitude of the recent spike/fall in polls for the Greens/Conservatives, we were asking ourselves, whether such a spike might be a one-off and if approval rates are going to mean-revert any time soon? Looking at historical episodes of spikes in voter preferences indeed shows that most of the time, approval rates tended to (partly) mean revert after a couple of weeks. Still, the Greens clearly stand out with four out of the five most recent spikes working in their favour (hot and dry summer seasons '18 &'19, Fridays for Future movement, and disappointment with Covid measures). Where does that leave us with respect to the tight race in September? [more]

German rent cap: Probably only under a green-red-red federal government (which seems unlikely) – but even then, water would still not flow uphill

April 19, 2021

Region: