Research
Tax competition | Germany | Corporate taxation | United States | Tax reform | Europe
Under the presidency of Donald Trump, the upcoming reform will lead to radical changes in how corporations are taxed in the US.

US Congress is fast approaching a consensus on a comprehensive tax reform. Though certain details still remain to be decided, it looks like US companies can expect to see their tax bills go down considerably. The reform will also lead to radical changes in how corporations are taxed in the United States. From now on, the US tax authorities will no longer tax the worldwide income of US companies; instead, following the concept of territoriality, only profits generated in the United States will be subject to tax. The Centre for European Economic Research (ZEW) in Mannheim together with the University of Mannheim have conducted a comprehensive study analysing the effects of this reform on international tax competition.

ZEW Indicator of Economic Sentiment
ZEW Indicator of Economic Sentiment | Business cycle research | Business survey | Short-term forecast | Germany | Business Cycle | Europe | ZEW Financial Market Survey
ZEW Indicator of Economic Sentiment for Germany, December 2017

The ZEW Indicator of Economic Sentiment for Germany records a decrease of 1.3 points in December 2017 and now stands at 17.4 points. The indicator thus still remains below the long-term average of 23.7 points. The assessment of the current economic situation in Germany increased by 0.5 points, with the corresponding indicator currently standing at 89.3 points.

Research
Renewable Energies | Innovation | Regional economic resources | Renewable resources | Enterprise
A high number of solar power plants in the region seems to encourage innovation based on renewable energy.

The success of Germany’s planned “energy transition” depends largely on how willing companies are to drive innovations in renewable energy forward. New regulations, government subsidies and rising fossil fuel prices are not the only decisive factors for this shift in energy usage. According to a recent study conducted by the Centre for European Economic Research (ZEW), Mannheim, and the Augsburg University of Applied Sciences, regional factors may also come into play, with German companies located near renewable energy plants and in regions with a high percentage of Green Party voters being more likely to invest in renewable energy.

Comment
EU Commission | Eurozone | Reform | European Economic and Monetary Union | Europe | Reform actions
The EU Commission has concrete plans for the further development of Europe’s Economic and Monetary Union.

On 6 December 2017, the European Commission presented its proposals on how to further integrate Europe's Economic and Monetary Union. The roadmap set out by the EU Commission includes, for instance, plans to introduce a European finance minister in 2019 as well as to transform the European Stability Mechanism (ESM) into a European Monetary Fund (EMF) with the aim of supporting Eurozone countries in the event of an economic or financial crisis. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), offers his view on the matter.

Research
Mannheim Innovation Panel | Financial crisis | Innovation activity | Enterprise | Innovation activity | banking sector
When banks are faced with financial constraints, this has an impact on the innovation performance of their corporate clients.

How much corporate customers of banks invest in innovations largely depends on the financing opportunities provided to them. Financial distress of banks as a result of macroeconomic shocks, however, has an impact on the innovation performance of their corporate clients. In times of tensions on financial markets, businesses most likely reduce their innovation activities if “their” banks are particularly hard hit by the distortions in the interbank market. These are the findings of a recent study carried out by the Centre for European Economic Research (ZEW) in Mannheim.

Research
price of electricity | Households | Consumers | Energy supply
Families with children are more likely to receive power cut-off notices than other consumers.

According to official statistics, in 2016 around 330,000 households in Germany had their power cut off because of unpaid energy bills. In this respect, families with children are much more likely to be affected than other consumers. This also holds for recipients of basic unemployment benefits since they have an increased risk of falling behind with their payments. As a consequence, the probability of receiving disconnection notices and facing electricity cut-offs is higher for these households than for others. Individuals with a low level of education as well as single-person households have a small chance of averting impending power cut-offs. Furthermore, the probability of a disconnection is particularly high among households who are in debt.

Research
Enterprise | Contract for work and services | Temporary agency work | Labour Market | Labour market research
Almost 90 per cent of all firms in Germany outsource at least one of their core processes that directly serve the firm’s main purpose.

Contracting out, that is, firms hiring external staff from other firms to perform services for them, is widespread in Germany. Almost 90 per cent of all German firms outsource at least one of their core business functions, i.e. processes that directly serve the firm’s main purpose. On top of this, 60 per cent of firms outsource at least one process which has a supportive function within the firm. There are a variety of different reasons for the prevalence of service contracts. For example, one of the most common motives for using service contracts is the possibility to acquire specialised personnel or services on a temporary basis. Furthermore, not only can the working conditions of workers hired under service contracts vary greatly, but the implementation of contractual agreements can differ too.

Comment
EU agricultural market regulations | Common agricultural policy | Agricultural subsidy | Agricultural market
The European Commission presents an outline of a future CAP which shifts more responsibility onto the Member States.

The European Commission has published its first ideas for the future of the Common Agricultural Policy (CAP). In its communication on “The Future of Food and Farming”, the Commission presents an outline of a future CAP which shifts more responsibility onto the Member States and takes a clearer stand with regard to environmental objectives and the fight against climate change. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW) in Mannheim, offers his view on the matter.

Research
Innovation activity | Innovation | Data acquisition | Enterprise | Big data
Big data opens up new possibilities for companies in terms of how they make decisions, which can benefit the innovation process.

Companies that use vast amounts of data undertake more product innovations and display a higher innovation intensity. These innovations based on big data can bring these companies market success – but only if companies make sufficient investments in the IT skills of their employees. These are the findings of an empirical study conducted by the Centre for European Economic Research (ZEW) in Mannheim.

China Economic Panel
China | Cyclical indicator | Short-term forecast | Greater China | Business survey | China Economic Panel
In November, the CEP Indicator drops and stands currently at 7.6 points.

According to the most recent survey for November (26/10/2017–15/11/2017), the economic outlook for China dropped by 9.7 points to a new value of 7.6 points (October: 17.3 points). The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has once again come in well above the long-term average of 5.4 points and signals a comparatively positive outlook for Chinese economic growth.

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