Latest Press Releases

The ZEW Indicator of Economic Sentiment for Germany decreased in the current October 2021 survey, falling 4.2 points to a new reading of 22.3 points compared to September. This is the fifth time in a row that the indicator has experienced a fall. The assessment of the economic situation in Germany has worsened in the current survey, and currently stands at 21.6 points, 10.3 points lower than in the previous month. This is the first time that the indicator has recorded a decline after its continuous increase between February and September 2021. Compared to the previous month, the outlook for the economic development in the next six months has noticeably deteriorated.

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The economic crisis following the COVID-19 pandemic has increased the debt levels of corporations and reduced the level of investments. Companies can use both equity and debt capital to finance investments. From a tax perspective, interest payments on debt are generally deductible from the corporate tax base, while costs related to equity are not. This debt-equity bias is a deep-rooted issue in today’s tax system and inhibits equity-financed investments. A recent ZEW policy brief shows that harmonisation at the European level is not suitable for solving the tax-induced distortion. Instead, the researchers recommend addressing the debt-equity  bias on national level, e.g. by implementing a dual income tax.

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At its meeting on 4 October 2021, the supervisory board of the ZEW – Leibniz Centre for European Economic Research in Mannheim elected Dr. Hans J. Reiter as its new chair. Reiter has been ministerial director and head of the Ministry of Science, Research and the Arts of the State of Baden-Württemberg since July 2021. Dr. Ralf Krieger, member of the executive board at Freudenberg SE, will continue to serve as vice-chair.

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In 2022, the ZEW Indicator of Economic Sentiment will be released on the following dates at 11:05 a.m. Frankfurt Time.

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The Federal Statistical Office published its preliminary results on the development of the German inflation rate in September 2021. According to the calculations, the inflation rate measured by the German consumer price index has risen from 3.9 per cent to 4.1 per cent compared to the previous month. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, comments on this matter:

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The US Federal Reserve has decided to keep its benchmark rate unchanged in a range of 0.0 and 0.25 per cent. However, it has announced that there could soon be a slowdown in asset purchases. Professor Friedrich Heinemann, head of the ZEW Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, explains:

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Dr. Simon Reif, health economist and head of the Project Group “Health Care Markets and Health Policy” at ZEW Mannheim, received the award for thought leader of the year 2021 from Handelsblatt and the Boston Consulting Group yesterday in Berlin. He works to boost digitalisation in the health care sector and help policymakers create effective incentives for the population, especially during the COVID-19 pandemic.

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Electricity from solar or wind power is increasingly substituting electricity from conventional coal and gas-fired power plants in Germany. This reduces both emissions and wholesale prices on the energy market. Both effects benefit not only Germany, but – via the transnational electricity market – also its neighbouring countries. However, the costs of promoting renewable energies are mainly borne by German consumers, as they pay the EEG surcharge levied on them. This is the result of a study by ZEW Mannheim and the Potsdam Institute for Climate Impact Research (PIK) based on generation and wholesale market price data for ten Central European countries between 2015 and 2020.

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In Germany, low-income households need more time on average to get to nursery, primary and secondary schools. Although the time difference to more affluent households is usually only a few minutes each way, this means a significant additional time burden over the course of a year.

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The ECB Governing Council doesn’t plan on ending bond purchases soon. However, compared to previous announcements, the PEPP crisis programme will slightly reduce the volume of bond purchases. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, explains:

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