Comment
Tax reform | Corporate taxation | United States

The Trump administration has specified first details of their long-announced tax reform. Accordingly, the reform seeks to cut corporate tax rates to 15 per cent, down from 35 per cent. For now, this tax cut will, however, not be combined with a border adjustment tax on all imports. Professor Friedrich Heinemann, head of the "Corporate Taxation and Public Finance" Research Department at the Mannheim Centre for European Economic Research (ZEW), comments on the reform.

China Economic Panel
China Economic Panel | Business survey | Greater China | Short-term forecast | Cyclical indicator | China
In April, the CEP Indicator has once again improved and is now at 17.7 points.

According to the current survey for April (5 April – 19 April 2017), the economic outlook for China has improved by 3.2 points. The CEP Indicator, which reflects the expectations of international financial market experts regarding China’s macroeconomic development over the coming twelve months, is currently at 17.7 points (March 2017: 14.2 points). This is the third consecutive time that the indicator rises. As a result, the CEP Indicator has now significantly exceeded the long-term average of 5.4 points. Due to this development, the highest level recorded since the introduction of the survey (21.4 points in June 2014) seems to be within reach.

Comment
Public Budgeting | Germany | Public Budget | Public Debt | Investment

Under the balanced budget amendment (or "debt brake") in Germany’s Basic Law, as of 2020 the federal states will be forced to balance their budgets and as of last year the limit on the total national deficit is set at 0.35 per cent of the gross domestic product. Barely three years before the amendment fully comes into effect, the Alliance 90/ The Greens fraction in the German Bundestag has moved to attach an investment rule to the balanced budget amendment. The rule would force the federal government to offset at least a depreciation in public assets through investment. Professor Friedrich Heinemann at the Centre for European Economic Research (ZEW) in Mannheim, today offered his thoughts on this motion in the Bundestag as an invited expert at the public hearing of the Budget Committee. In his statement Heinemann called for greater transparency through independent councils rather than new regulations.

Research
Trade | Tax Policy | Export | United States | Tax reform | Import | Tax planning
The EU would have to expect fatal consequences from the enforcement of the US tax plans.

Over the course of the next few weeks, US President Donald Trumps will finally have to take a stand regarding his tax policy plans. He had announced a "historic tax reform", the details of which he now plans to specify. Against this backdrop, Christoph Spengel and Friedrich Heinemann examined the US tax plans of the Republican Party in a study by the Centre for European Economic Research (ZEW), Mannheim. Their message: If Trump translates these plans into actions, this could lead to an international fiscal chaos with unforeseeable consequences for trade, investment, and exchange rates.

Research
M&A report | M&A | United Kingdom | Europe | M&A activity | Brexit

Although the UK has now officially decided to leave the European Union, British companies continue to be highly attractive to foreign companies. Judging by the number of mergers and acquisitions (M&A) of British companies, M&A activities have apparently remained largely unaffected by the Brexit vote in June 2016 since neither a drop nor an increase in M&A was witnessed. By contrast, the financial volume of M&A transactions reached an absolute record high following the Brexit vote. 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
Transition to work | Field of study | Students | Occupational qualification | Highly skilled labour
The risk of overqualification for university graduates in Germany varies depending on the field of study, academic achievement as well as success in the labour market.

Although a tertiary degree is often considered a crucial step towards a successful professional career, many highly qualified young professionals in Germany have been unable to find employment which is appropriate to their level of education. A study by the Centre for European Economic Research (ZEW) in Mannheim shows that even after ten years of labour market experience, one out of seven university graduates in Germany is overqualified, i.e. they hold a position which is below their qualification level. The risk of overqualification varies, however, depending on the field of study, academic achievement as well as labour market success.

Research
European Union | M&A activity | Europe | Turkey | M&A | M&A report
The overall transaction volume of M&As between Turkish and EU companies decreased by more than 73 per cent in 2016.

The volume of mergers and acquisitions (M&A) between Turkish and EU companies (EU-28, including Croatia and United Kingdom) decreased significantly in 2016. This development may possibly be due to political tensions as well as the fact that Turkey's prospects of accession to the European Union have worsened considerably. These are the findings of studies carried out by the Mannheim-based Centre for European Economic Research (ZEW) on the basis of the Zephyr database of Bureau van Dijk.

ZEW Indicator of Economic Sentiment
ZEW Indicator of Economic Sentiment | Business survey | Germany | Short-term forecast | Cyclical indicator | Business Cycle
ZEW Indicator of Economic Sentiment for Germany, April 2017

The ZEW Indicator of Economic Sentiment for Germany increased substantially by 6.7 points in April 2017. The indicator now stands at 19.5 points, thereby reaching its highest level since August 2015. Though the long-term average as calculated from the beginning of the survey (December 1991) is yet to be beaten, these results are comparable to the expectations prior to the Brexit vote in June 2016. "The German economic situation has proved fairly robust in the first quarter. This is highlighted by the solid figures for growth in industrial production, the construction sector and retail sales from February. In addition, the consistently high labour demand has boosted private consumption. The financial market experts expect this positive development to continue," comments ZEW President Professor Achim Wambach .

M&A Index
M&A activity | ZEW-ZEPHYR M&A-Index | M&A | M&A report
The current ZEW-Zephyr M&A Index Germany including the moving 12-month average.

According to the ZEW-ZEPHYR M&A Index, mergers and acquisitions (M&A) involving German businesses continue the upward trend seen in the previous months. The index, which is based on the number of completed M&As per month, climbed to 132 index points in January, kicking off 2017 on a very positive note. The only time the index exceeded this level was in January 2016, when the ZEW-ZEPHYR M&A Index recorded a monthly average of 133 points. The moving twelve-month average of the M&A Index has also grown continually. The index currently reads 98 points (as of January 2017) and is thus on the verge of exceeding the 100-point mark for the first time since 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
Innovation activity | Berlin | Technological competition | Innovation | Innovation intensity | Start-Up
Berlin\'s innovation hotspots for businesses are often located in the immediate vicinity of institutions of higher education and research facilities.

Innovative firms in Berlin are trying to get as close to research as they can. Berlin's innovation hotspots for businesses are often located in the immediate vicinity of institutions of higher education and research facilities. This is certainly the case for the area surrounding the Technical University of Berlin and the districts of Adlershof and Buch. Innovative firms are, on average, surrounded by 80 per cent more researchers within a radius of 50 metres than non-innovative firms. However, the further we expand the radius, the less significant this difference becomes. For example, within a 250-metre radius innovative firms are surrounded by only 40 per cent more researchers. An innovative firm's direct geographical proximity to research is thus a decisive factor. These are the findings of a study carried out by the Centre for European Economic Research (ZEW), Mannheim, in cooperation with Professor Knut Blind at TU Berlin with support from Technologiestiftung Berlin.

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