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On 1 August 2020, the renowned environmental and energy economist Professor Sebastian Rausch took up his position as head of the Research Department “Environmental and Resource Economics, Environmental Management” at ZEW Mannheim. “As head of the research department, I look forward to enhancing my research on the design of emissions and energy markets and to contributing to the climate and economic policy debate with my findings,” says Sebastian Rausch.

In August 2020, the ZEW Indicator of Economic Sentiment for Germany increased again significantly compared to the previous month, after having declined slightly in July. Expectations are now at 71.5 points, 12.2 points higher than in the previous month. The assessment of the economic situation in Germany has slightly worsened, with the corresponding indicator decreasing 0.4 points to minus 81.3 points in the current August survey.

In light of the changes to organisational processes that businesses have had to make due to the COVID-19 pandemic, many firms have realised that there are more tasks that can be carried out from home than previously expected. In the business-related services sector, more than 50 per cent of companies – and in the manufacturing sector, more than 40 per cent – are reporting such digital learning effects. “The widespread recognition among firms that many more tasks can be performed remotely than previously assumed reinforces the impulse the coronavirus crisis is giving to increasing mobile work. Because of these new experiences and insights, many companies are planning to use remote work more regularly after the crisis than they did before,” says Dr. Daniel Erdsiek, a researcher in ZEW’s “Digital Economy” Department. About one in three companies had to invest in new technologies in the short term in order to make remote work arrangements available during the crisis. These are the results of a recent representative survey conducted by ZEW Mannheim in June 2020 among approximately 1,800 companies in the information economy and manufacturing industry.

In the second quarter of 2020, the German economy experienced the sharpest drop in its economic output ever recorded by the German Federal Statistical Office in Wiesbaden since it started its quarterly calculations in 1970. In comparison to the previous quarter, the already low gross domestic product (price, seasonally and calendar adjusted) fell by 10.1 per cent. When compared to the second quarter of 2019, this represents a decrease of 11.7 per cent. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter.

As expected, the US Federal Reserve left the target range for the federal funds rate unchanged between 0.0 and 0.25 per cent. In addition, it will continue its large-scale bond purchases and direct lending to the corporate sector. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim comments on this matter.

The economic sentiment in the information and communication technology sector (ICT) in Germany further deteriorated in the second quarter of 2020: The ZEW sentiment indicator for the German ICT sector decreased by 3.5 points compared to the first quarter of 2020, falling to a historic low of 47.6 points. This marks the first time that the ZEW sentiment indicator has dropped below the critical 50-point mark since the survey began in 2011, indicating a negative development of the business situation. In addition to reporting negative expectations regarding turnover and demand for business products, firms in the ICT sector are also pessimistic about imminent personnel changes.

Climate protection and climate change remain important issues during the coronavirus pandemic. In a recent survey, more than 90 per cent of German households stated that the importance of climate change has not changed or has even increased since the beginning of the year. The survey was funded by the Federal Ministry of Education and Research (BMBF) and carried out on behalf of RWI – Leibniz Institute for Economic Research, as well as ZEW Mannheim and other cooperation partners.

After days of negotiations, the European Council agreed on the EU Recovery Fund package and the next EU multiannual financial framework. The “Next Generation EU” package, which is intended to speed up the recovery from coronavirus-induced recession, remains at 750 billion euros. However, the 500 billion euros in grants provided for in the Commission proposal have been reduced to 390 billion euros, with the rest being made available to Member States as loans. The whole package is financed by EU borrowing, which is to be repaid by 2058.

In the current July survey (7–13 July 2020), the CEP indicator increased slightly by 1.2 points, reaching a new value of 31.7 points. The CEP indicator, based on the China Economic Panel (CEP) in cooperation with Fudan University, Shanghai, reflects the economic expectations of international financial market experts for China on a 12-month basis.