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Many firms have made progress with regard to the digitalisation of their products and services, their business processes and the way of working over the course of the coronavirus pandemic. Around 40 per cent of companies in the business-related services sector and approximately 25 per cent of businesses in the manufacturing industry stated to have seen a surge in digitalisation. Meanwhile, the turnover of these businesses often remains – sometimes significantly – below pre-crisis levels. These are the results of a representative survey conducted by ZEW Mannheim in September 2020 among approximately 1,400 companies in the information economy and manufacturing industry.

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In 2019, the information and communications technology (ICT) sector generated sales of almost 281 billion euros, thus growing for the sixth consecutive year. Gross value added and capital expenditure also reached new record levels: for the first time, the sector generated added value of over 120 billion euros and invested more than 20 billion euros. This is also reflected in the number of employees that are subject to social insurance contributions and self-employed individuals in the ICT sector, which rose to around 1.28 million in 2019. This represents an increase of around 43,000 jobs compared to the previous year. In 2019, the ICT sector generated around 5.1 per cent of the value added of the entire commercial economy, which is attributable almost exclusively to ICT service providers. Their gross value added has been growing continuously since 2010 and amounted to 107 billion euros in 2019. However, the gross value added of the ICT hardware segment also increased year-on-year from 13 to 14 billion euros.

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The German Federal Ministry of Finance’s Working Party on Tax Revenue Estimates has presented its new forecasts to the government authorities at federal, state and municipal levels. The forecasts confirm that tax revenues will fall significantly in the current year and the following years. 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 chemical industry can contribute considerably to climate change mitigation and the sustainable transformation of the economy and society through its innovations. This is the result of a study jointly conducted by the Centre for Economic Policy Studies (CWS) at Leibniz University Hannover and ZEW Mannheim, on behalf of the German Chemical Industry Association (VCI).

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The European Parliament and the Council have agreed on the EU budget for the time frame 2021 until 2027. The Parliament was able to make small amendments, with slightly increased budgets in research, health, border management and the Erasmus programme. The agreement also means that the penultimate obstacle for the EU’s coronavirus recovery plan has been cleared. The only remaining task is to get all 27 Member States of the EU to agree on the budget, although there is a certain degree of uncertainty from Hungary. The Member State has criticised the fact that future allocations of the EU budget may be stopped on the grounds of violations of the rule of law. Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at ZEW Mannheim, gives the following assessment of the agreement:

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The ZEW Indicator of Economic Sentiment for Germany has once again taken a sharp decline in the current November 2020 survey, plummeting 17.1 points to a new reading of 39.0 points compared to the previous month. Having achieved a temporary high of 77.4 points in September 2020, expectations have since fallen by 38.4 points. The assessment of the economic situation in Germany has slightly worsened, and currently stands at minus 64.3 points, 4.8 points lower than in October.

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Members of state parliaments have faith in adhering to the debt brake in their federal state if they belong to a governing party. Politicians who sit on the opposition benches are much more sceptical about this. Opposition members of parliament who then take office after winning a state election suddenly become a lot more optimistic regarding the feasibility of balancing the domestic budget. On the contrary, pessimism grows amongst members of parliament whose party loses control of government. These are the insights provided in a new study by ZEW Mannheim in cooperation with the University of Mannheim, which was conducted within the framework of the Collaborative Research Center on The Political Economy of Reform funded by the German Research Foundation.

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Joe Biden was elected the 46th president of the United States. Professor Achim Wambach, president of ZEW Mannheim, comments on this matter:

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Especially for low-wage earners, solo self-employment provides an important alternative to regular employment or unemployment. At the same time, however, this also provides a way for employers to get around having to pay the minimum wage, since the minimum wage does not apply to the self-employed. Solo self-employment has decreased since the introduction of the statutory minimum wage in 2015, even in sectors with a high share of solo self-employed individuals, such as janitorial or repair services. “Overall, workers have not been increasingly forced into solo self-employment by their employers despite the minimum wage,” concludes Moritz Lubczyk, researcher in the Research Department “Economics of Innovation and Industrial Dynamics” at ZEW Mannheim.

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Under the new own resources decision, the EU has secured an entitlement to financial contributions from its Member States until 2058, which it does not even remotely need to finance the coronavirus recovery plan. A new study by ZEW quantifies this excess cover at ten times of what would actually be needed to repay the debt from the coronavirus recovery plan totalling 750 billion euros.

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