Latest Press Releases

The ZEW Indicator of Economic Sentiment for Germany decreased in the current April 2021 survey, falling 5.9 points to a new reading of 70.7 points. This is the first time that the indicator has experienced a drop since November 2020. Expectations are still at a very high level. The assessment of the economic situation in Germany improved by 12.2 points compared to the previous month. The corresponding indicator currently stands at minus 48.8 points, reaching roughly the same level as in March 2020.

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The fact that the government bond markets within the eurozone have remained stable throughout the coronavirus pandemic is especially owed to the ECB and its PEPP securities purchase programme. By contrast, the EU coronavirus financial aid packages have not made any measurable contribution to narrowing interest rate differentials. This is confirmed by a study conducted by ZEW Mannheim with the support of the Brigitte Strube Stiftung.

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OECD countries react differently to changes in the business cycle regarding their expenditure on research and development (R&D). Countries tend to noticeably increase their budgets for R&D when there is an economic upturn, while public R&D spending remains almost constant on average across all countries when there is a downturn in economic growth.

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It is crucial for buyers in public procurement in Germany and Finland to avoid allocating public contracts to bidders with a bad reputation. However, the possibility of being able to avoid such bidders is limited in practice. According to a current ‘EconPol’ study in cooperation with ZEW Mannheim, public buyers either shun procurements which exceed expected costs or they reject these if they do not meet quality expectations.

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The Bundestag will make a final decision today on whether Germany will approve the EU’s own resources decision. This decision paves the way for joint EU borrowing of 750 billion euros to finance the European coronavirus recovery package. Professor Friedrich Heinemann, research department head and public finance expert at ZEW Mannheim, comments on this matter as follows:

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In the March 2021 survey (9–17 March 2021), the CEP indicator decreased by 21.2 points to a new value of 42.8 points. Despite this sharp decline, the indicator remains at a very high level. The CEP indicator, based on the China Economic Panel (CEP) and conducted by ZEW Mannheim in cooperation with Fudan University, Shanghai, reflects the economic expectations of international financial market experts for China on a 12-month basis.

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According to financial market experts, the German banking sector is likely to face a rising number of loan defaults and a growing need to make additional provisions for corporate loans in the coming six months. In addition, they anticipate a slight increase in consolidation among savings banks and cooperative banks. These are the results of a special question featured in the most recent ZEW Financial Market Survey carried out in March 2021 among 189 financial market experts.

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The electricity price should not be set uniformly nationwide, as has been the case in Germany so far, but should take into account the local physical conditions of the grid. This is the result of a recent research paper published by a consortium consisting of the Technical University of Munich, FIM / Fraunhofer FIT, DIW Berlin, the Institute of Energy Economics at the University of Cologne (EWI) and ZEW Mannheim within the framework of the Kopernikus project ‘SynErgie’ funded by the German Federal Ministry of Education and Research and coordinated by Project Management Jülich (PtJ).

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Despite the increase in government bond yields, the US Federal Reserve has decided to keep its benchmark rate unchanged in a range between 0.0 and 0.25 per cent, and not to expand its asset purchase programme any further. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW, comments on this matter.

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The property tax burden of poorer tenants is more than four times higher than the burden of richer tenants. Landlords are able to fully pass through the tax to rental prices after three years. On the other hand, sales prices do not react to tax changes. A recent study by ZEW Mannheim in cooperation with Maastricht University confirms this. The property tax is therefore a regressive tax. Relatively speaking, it burdens households with lower incomes more than households with a higher financial standing.

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