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

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

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Analyst:

Barbara Boettcher, Marion Mühlberger, Stefan Schneider

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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]

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Greens’ convention – closing the ranks but little new impetus

June 14, 2021

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

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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

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

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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

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

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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

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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

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

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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

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Sectors and resources, Sustainability

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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

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

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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]

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

April 28, 2021

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Jochen Moebert, Marc Schattenberg

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Macroeconomics

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Talking Point

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]

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

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Germany's super election year 2021, Real estate

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Analyst:

Jochen Moebert

Talking Point

After Berlin's rent cap was declared unconstitutional by the Federal Constitutional Court, Germany is discussing the consequences. Will there be a nationwide rent cap after the federal election in September? This is one of the most frequent and potentially most important questions for many landlords and tenants. [more]

Next German chancellor: Maybe young, female and Green

April 15, 2021

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

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On Monday, the Green party will present their first chancellor candidate in the 41-year party history. The leadership tandem of Annalena Baerbock and Robert Habeck is set to decide amongst themselves whom to field as candidate for the September elections, successfully avoiding any semblance of a power struggle. In our view, the odds appear slightly tilted towards Annalena Baerbock. The decision will formally be confirmed at the party convention in June. [more]

GCC rules Berlin rent cap unconstitutional. Implications and assessment

April 15, 2021

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The rent cap in Berlin was clearly the main topic in the German housing market pre-COVID. Across German cities rent growth decelerated with the extensive media coverage of the Berlin rent cap. Rental growth could pick up again in several cities and regions, as many initiatives which copied the Berlin rent cap might lose momentum. [more]

CDU/CSU chancellor candidate: Party discipline to trump popularity polls

April 13, 2021

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

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