China Economic Panel
Business cycle research | Business survey | Greater China | Short-term forecast | Cyclical indicator | China | China Economic Panel
In January, the CEP Indicator improves and stands currently at minus 1.1 points.

In the most recent survey conducted in January (2–11 January 2018), expectations for the Chinese economy have improved again, rising to minus 1.1 points. In December, the indicator was still as low as minus 10.7 points. Nevertheless, the CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, is still below the long-term average of 5.0 points. The survey does, however, not reveal a downward trend in expectations. Instead, since around 2014, expectations have been seen to fluctuate around a relatively constant average value.

Comment
Energy transition | ZEW President | Coalition government | European policy | Coalition | Federal Government | Digitisation
Germany is still waiting for a new government to be formed following federal elections in September 2017. The CDU/CSU and SPD have just entered into discussion of forming a “Grand Coalition”.

In their recent coalition paper released following exploratory talks about forming a “Grand Coalition”, the CDU/CSU and SPD reached key compromises on EU policy, digitalisation and Germany’s planned energy transition. Professor Achim Wambach, president of the Centre for European Economic Research (ZEW), Mannheim, offers his view on the paper.

Research
Income | Tax law | United States | Income tax | Subsidy
Self-employed workers in the US adjust their income if government welfare and aid programmes provide the incentive to do so.

Self-employed workers in the US adjust their income if government welfare and aid programmes provide the incentive to do so. Though some make this adjustment legally by working more or fewer hours, other self-employed workers choose to illegally misreport their income. These are the findings of a study conducted by the Centre for European Economic Research (ZEW), Mannheim, in cooperation with the ifo Institute, Munich, and the Institute of Labor Economics (IZA), Bonn.

Research
European Union | Europe | Agricultural Policy | Common agricultural policy | Corporate taxation | EU educational policy | Educational policy | Reform | reform process
The division of competences between Brussels and the EU Member States is the crux of the European integration process.

In 2018 the new German government should start pushing for the EU to redistribute responsibilities between Brussels and the Member States. For example, responsibilities such as safeguarding farmers’ income should return to the remit of the individual countries. On the other hand, EU institutions should be assuming far greater responsibility for development aid, defence and asylum policy. These are the main findings of a study initiated by the Bertelsmann Stiftung and conducted in cooperation with the Centre for European Economic Research (ZEW), Mannheim.

Comment
European Union | Tax Policy | National liberation movement | Spain | Fiscal policy

In the Catalan regional elections, pro-independence parties were once again able to secure a majority in the Catalan parliament. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), Mannheim, comments on the election results.

Research
Public bond | ZEW Financial Market Survey | Stock Market | Fixed investment | Financial investment | Securities investment | Real estate | ZEW survey | Financial market experts
Financial market experts consider stocks to be equally attractive in 2018 as in 2017. Government and corporate bonds, as well as real estate, by contrast, are considered to be significantly less profitable investment options than in the previous year.

In 2018, stocks remain as attractive for investors as in 2017, whereas government and corporate bonds, as well as real estate, are considered to be significantly less profitable investment options than in the previous year. This is the result of a special question in the ZEW Financial Market Survey conducted by the Centre for European Economic Research (ZEW) in Mannheim.

M&A Index
M&A | Takeover | Merger | ZEW-ZEPHYR M&A-Index | M&A activity
The ZEW-ZEPHYR M&A Volume per Deal Index\'s twelve-month moving average currently is at 113 points, its lowest level since April 2015.

Following two record years for mergers and acquisitions (M&A) worldwide in 2015 and 2016, this trend appears to have reversed in 2017. In November 2017, the ZEW-ZEPHYR M&A Volume per Deal Index’s twelve-month moving average was at 113 points, its lowest level since April 2015. November was the eleventh month in a row that the twelve-month moving average continued to fall, a trend that was last seen during the later stages of the financial crisis in 2009. These are the findings of studies carried out by the Centre for European Economic Research (ZEW), Mannheim, on the basis of the Zephyr database of Bureau van Dijk.

Research
Industry report | Germany | Sectoral business cycle | International business | Sectoral development | Information Services | E-commerce | ICT | Industry analysis
Firms in the German information economy increasingly engage in cross-border electronic commerce to sell and purchase goods and services.

For firms in the information economy – consisting of the information and communication technologies sector, media service providers and knowledge-intensive service providers – the internet is becoming an increasingly important tool for the purchase of goods and services from foreign countries or the sale of goods and services to international customers. This is the result of a survey among firms in the German information economy, conducted on a regular basis by the Centre for European Economic Research (ZEW), Mannheim.

China Economic Panel
China Economic Panel | Business survey | Greater China | Short-term forecast | Cyclical indicator | China
In December, the CEP Indicator declines further and stands currently at minus 10.7 points.

In the most recent survey conducted in December (4–13 December 2017) expectations for the Chinese economy fell once again, leaving the index at a level of minus 10.7 points, 18.3 points lower than in November. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, has thus once again come in well below the long-term average of 5.1 points.

Comment
Public bond | ECB | Monetary Policy | Interest rate policy | Interest Rate | Monetary policy decisions | Federal Reserve Bank
In December 2017, the ECB once again decided against adjusting its interest rates.

As anticipated, the European Central Bank (ECB) has decided not to make any changes to its policy of zero and negative interest rates. As decided back in October 2017, the ECB will also continue with its bond-buying programme into the new year, halving its purchase volume to 30 billion euros a month. By contrast, the US Federal Reserve announced yesterday that it would be raising interest rates for the third time this year. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), Mannheim, offers his view on the ECB’s decision.

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