Research
Public bond | Eurozone | Budget deficit | Monetary Policy | Southern Europe | Europe | ECB
The ECB bond purchase programme benefits in particular Spain and Italy.

Southern European countries profit in a disproportionate way from the bond-buying programme of the European Central Bank (ECB), with the largest bias towards Spain and Italy. Within the framework of the Public Sector Purchase Programme (PSPP), national central banks and the ECB have purchased Spanish and Italian government bonds whose volume exceeds Spain’s and Italy’s share in gross domestic product (GPD) by around 43 billion euros and 51 billion euros, respectively. If the ECB continues its bond-buying programme in 2018, this would further extend the preferential treatment of euro countries with high debt levels. These are the findings of a current quantitative analysis by the Centre for European Economic Research (ZEW) in Mannheim.

China Economic Panel
China Economic Panel | Business survey | Greater China | Short-term forecast | Cyclical indicator | China
In October, the CEP Indicator climbs further and stands currently at 17.3 points.

In the most recent survey for October (29/09/2017–17/10/2017) expectations regarding the economic climate in China rose considerably, with the index climbing 9.0 points to a current level of 17.3 points (compared to 8.3 points in September). 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 above the long-term average of 5.3 points.

Research
M&A activity | Air Transport | Takeover | Merger | Airline | M&A | M&A report

After the slow but steady upward trend witnessed since the turn of the millennium, M&A activities in the airline industry are for the first time experiencing a downward trend again. Since the beginning of 2000, the number of M&As involving businesses in the airline industry has averaged 97 transactions per year, with global transactions between 2007 and 2015 even amounting to more than 100 per year. In 2016, however, this number went down to 86 transactions. 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.

Dates and News
ZEW | ZEW Sponsors' Association for Science and Practice
ZEW Director Thomas Kohl with Dr. Alexander Selent, Claudia Diem, Dr. Ralph Rheinboldt, ZEW President Professor Achim Wambach and Dr. Georg Müller (from left to right)

At its most recent general assembly, the Sponsors’ Association for Science and Practice at the Centre for European Economic Research (ZEW) in Mannheim elected Dr. Georg Müller, chief executive at MVV Energie AG, as its new chair. Newly admitted to the association’s board were Dr. Ralph Rheinboldt, board member at Fuchs Petrolub SE, and Manfred Bauer, board member at MLP SE.

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

The ZEW Indicator of Economic Sentiment for Germany continued to improve in October 2017, however, not as strongly as in the previous month. The indicator currently stands at 17.6 points, which corresponds to an increase of 0.6 points compared with the September result. The indicator, however, still remains below the long-term average of 23.8 points. "The improved outlook for the coming six months is not least the result of the surprisingly positive growth figures seen in the previous months. In August, figures for both production and incoming orders were significantly better than expected. The framework conditions for German exports, which have already seen a significant rise, are further improved by positive growth figures for Europe. The fact that the inflation rate is rising again, and expected to climb further, equally points towards a positive economic development in Germany, making a change in the ECB’s monetary policy more likely," comments ZEW President Professor Achim Wambach.

M&A Index
M&A report | Mergers and Acquisitions | ZEW-ZEPHYR M&A-Index | Merger | Takeover | M&A | M&A activity
The number of mergers and acquisitions involving German firms has dropped considerably since early 2017 according to the ZEW-ZEPHYR M&A Index.

After a strong start to the year 2017, the number of mergers and acquisitions (M&A) involving German firms has fallen. This trend is clearly discernible in the ZEW-ZEPHYR M&A Index, which reflects the number of M&A transactions conducted in Germany on a monthly basis. While back in January 2017, the index reached 145 points – its highest level since January 2009 – by July, it had fallen to 75 points. This seems to indicate that the continuing upward trend in mergers and acquisitions involving German firms has stalled. These are the findings of the latest M&A report carried out by the Centre for European Economic Research (ZEW), Mannheim, on the basis of the Zephyr database of Bureau van Dijk.

Comment
Air Transport | Merger control | Competition | Airline | Competition authority
The majority of insolvent airline Air Berlin will be taken over by Lufthansa.

Lufthansa has announced that it plans to take over the majority of the airline Air Berlin, which recently declared insolvency. Professor Achim Wambach, PhD, president of ZEW and chairman of the Monopolies Commission, offers his thoughts on the announcement.

China Economic Barometer
Business cycle research | Business survey | Managers | Short-term forecast | Greater China | China | ZEW-PwC Indicator of Economic Sentiment China

The EU and Germany are already profiting from the UK’s decision to leave the EU. According to the assessment of German managers working in China, Brexit is offering many European companies the opportunity to expand their trade with China. These are the findings of the ZEW-PwC China Economic Barometer, a survey carried out by the Centre for European Economic Research (ZEW), Mannheim, together with the accounting and consulting firm PricewaterhouseCoopers (PwC), for the fourth quarter of 2017.

Research
Tax relief | Income tax | Political reform | Households | Tax reform | Income tax policy
Planned reforms of income tax and the “solidarity surcharge” in Germany differ wildly depending on which political camp they come from.

Planned reforms of income tax and the “solidarity surcharge” in Germany differ wildly depending on which political camp they come from. By far the greatest variation is visible in the taxation of private households. Total tax relief based on the various parties’ tax plans could range from 1.5 billion to 34.6 billion euros, while the average disposable income of private households could rise from anywhere between 107 to 905 euros a year. In all of the suggested tax reform plans, the absolute tax reductions for households (in euros) for the most part increase with income. These are the principal findings of a joint study conducted by the Centre for European Economic Research (ZEW), Mannheim, and the IZA – Institute of Labor Economics, Bonn, on behalf of the German Federal Ministry for Economic Affairs and Energy.

Comment
Referendum | Spain | National liberation movement | Europe | Fiscal policy
Demonstrations in favour of independence from Spain have become a daily occurrence on the streets of the Catalan capital, Barcelona.

In the aftermath of the independence referendum in Catalonia, supporters and opponents of Catalan secession remain bitterly divided. The chaotic conflict surrounding the referendum represents a severe test to Spanish unity. 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 referendum and its implications for a potential European fiscal union.

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