Real estate market | Regulation | Real Estate Services | Real estate financing
In the event that the German residential real estate market is faced with the imminent threat of overheating, the government will be able to set upper limits on individual loans.

In order to prevent the residential real estate market from potentially overheating, German law-makers have created a number of what are known as “macroprudential tools” to be implemented in the mortgage market. If these new regulations are actually to be put into practice, however, this should be done with caution. Given the already far-reaching regulation of residential real estate financing and the fact that lending practices are already intended to encourage stability, this could run the risk of crossing the line into over-regulation. These measures could particularly inhibit home-ownership among German households with limited equity but a high regular income looking to buy relatively cheap housing.

ZEW Summer Workshop | Award | Heinz König Young Scholar Award | Research Award
ZEW Research Group Heads Kai Hüschelrath (l.) and Vitali Gretschko (r.) with the winners Jiekai Zhang and Bernhard Kasberger.

The Mannheim-based Centre for European Economic Research (ZEW) has presented this year’s Heinz König Young Scholar Award to two young researchers. The recipients of the award were Jiekai Zhang from the Centre de Recherche en Économie et en Statistiques (CREST) at the École Nationale de la Statistique et de l’Administration Économique (ENSAE) ParisTech and Bernhard Kasberger from the University of Vienna. Jiekai Zhang was awarded the prize by ZEW in recognition of her research into the effects of regulated TV advertising for both TV viewers and advertisers while Bernhard Kasberger was recognised for his work on the efficiency of mobile communications markets following frequency auctions.

Information Economy
Sectoral development | Sectoral business cycle | Germany | Information Services | Industry report

Economic sentiment among companies in the German information economy sector has been largely positive in the second quarter of 2017. The ZEW sentiment indicator is currently at a high level of 67.7 points, signalling that the majority of companies have a positive view of the economic climate in this sector of the economy. This represents an increase of 0.9 points compared to the previous quarter. This is the finding of a survey conducted among firms in the German information economy by the Centre for European Economic Research (ZEW), Mannheim, in June 2017.

Federal Reserve Bank | Interest Rate | United States | Interest rate policy | Monetary policy decisions

The Federal Reserve decided to keep its interest rates unchanged in July after it hiked its benchmark rates up to between 1.0 to 1.25 per cent one month ago. The central bank announced it would begin rolling back its massive balance sheet “relatively soon”. However, it still remains unclear when exactly this will be. 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 Fed’s decision.

China Economic Panel
China | Cyclical indicator | Short-term forecast | Greater China | Business survey | China Economic Panel
In July, the CEP Indicator has decreased substantially and is now minus 4.1 points.

According to the current survey for July (5–19 July 2017), the economic outlook for China has declined significantly, falling by 13.8 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 no higher than minus 4.1 points (June 2017: 9.7 points) and thus far below the long-term average of 5.1 points.

Innovation indicator | Innovation activity | Innovation Survey | Innovation | Innovation intensity | innovation capacity | Digitisation
Germany performs well in international comparison, but fails to receive a top ranking on the Innovation Indicator 2017.

In competition against the most highly innovative economies around the world, Germany has climbed up the international ranking by one place, but is still unable to catch up with the leading countries, Switzerland and Singapore. The German innovation system also did not come top in the areas of economy (7th), science (11th), education and government institutions (8th in both), and civil society (13th). The area in which Germany particularly needs to catch up is digitalisation, having come in well behind other industrialised countries in 17th place.

Interest Rate | Interest rate policy | ECB

As expected, the European Central Bank (ECB) today announced that it would not be adjusting its base rates, nor would it be making any changes to its outlook on interest rate policy. This means that banks and savers will have to live with the ECB’s negative deposit rate of minus 0.4 per cent for quite a while longer. The ECB also could not bring itself to give any indication that it would soon end its current asset purchase programme under which the bank has been purchasing securities to the sum of 60 billion euros a month. 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 ECB’s actions.

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

The ZEW Indicator of Economic Sentiment for Germany fell slightly by 1.1 points in July 2017 and now stands at 17.5 points. The indicator thus still remains below the long-term average of 23.8 points. The assessment of the current economic situation in Germany decreased by 1.6 points in July. The corresponding indicator, however, still remains at a fairly high level of 86.4 points. “Our overall assessment of the economic development in Germany remains unchanged compared to the previous month. The outlook for the German economic growth in the coming six months continues to be positive. This is now also reflected in the survey results for the eurozone,” comments ZEW President Professor Achim Wambach, PhD.

Brexit | Power Industry | United Kingdom | Energy market | European Union Energy Policy | Europe | ZEW-Energiemarktbarometer
Most experts in France and Germany think that an “Energy Brexit” would hurt the UK more than it would the EU.

About a year ago, the majority of UK voters decided the UK should leave the European Union. Yet the details of Brexit still have to be worked out. The UK parliamentary election held in June this year has increased uncertainty in this matter. The EU internal energy market is a showcase for how Brexit may threaten market integration between the UK and the continental EU. When asked about the effects of the UK leaving the EU internal energy market, the vast majority of experts in France and Germany thought that an “Energy Brexit” would hurt the UK more than it would the EU. This is one of the key findings of the Energy Market Barometers conducted among experts from academia and industry by the Mannheim-based Centre for European Economic Research (ZEW) and the Grenoble École de Management (GEM).

Qualified workers | Labour Market | Elderly workforce | Highly skilled labour | Skills shortage
From 2010 onwards, there has been an emerging trend of companies offering increased support to older employees.

When companies struggle to fill their vacancies with skilled workers, this can have a considerable negative impact on overall economic development. The economic consequences of such skills shortages are largely dependent on how the companies affected choose to react. According to the results of a study carried out by the Mannheim-based Centre for European Economic Research (ZEW), on behalf of the German Federal Ministry for Economic Affairs and Energy, the vast majority of firms in Germany are still able to fill all of the skilled positions they need. There are, however, some firms finding it increasingly difficult to recruit enough skilled workers.


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