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Beacon of stability: The foundations of Germany’s success

December 15, 2016
Region:
Germany remains an anchor of steadiness with an undisputed role as leader in Europe and is the only country that comes close to being on a par with America. This story of success is based on many structural factors, some of which complement and mutually reinforce each other. We group them as follows: (1) Macropolicies focused on stability and growth (2) Institutions grounded in German ‘ordoliberalism’ (3) Global companies with unique structures (4) An equitable system of social security and cooperative social partners (5) A long-term perspective by companies and citizens with the willingness to forgo immediate reward – in our view the most important factor in the success. The combination of innovative, multinational companies, functioning institutions and highly skilled workers will, in our view, maintain Germany’s competitiveness and prosperity into the future. German politicians are therefore confronted with the increasing challenge of holding the eurozone together. However, if anti-euro movements gain the upper hand in key partner countries, thereby increasing the disruptive risks, there may be a reassessment in Germany of the euro’s costs and benefits. [more]

More documents about "Germany"

234 (59-70)
September 12, 2017
Region:
59
German industrial policy has been cautious over the past few decades, especially in comparison with several other European countries. And this approach has been successful. The German government should continue to refrain from active industrial policy. Nevertheless, we believe that greater state engagement or a realignment of existing policy is vital in some areas. One area where we see a need for action is network infrastructure. When it comes to the shift in German energy policy, it would be sensible to focus more strongly on what is genuinely achievable. [more]
September 6, 2017
Region:
60
As the highlight of a so far uninspiring election campaign, Chancellor Merkel and her SPD contester Martin Schulz exchanged arguments in yesterday’s TV debate. Given the huge audience of 16.2 m, i.e. 26% of the electorate, Schulz understood the debate as an opportunity to challenge the Chancellor and to reverse the SPD’s downward trend in the polls. While the chancellor remained in her cautious rhetoric Martin Schulz tried to seize his chances by attacking Merkel’s policy course above all on migration and foreign policy as well as equality – issues voters consider most important in surveys. [more]
September 6, 2017
Region:
61
Germany booming but wage-inflation still missing. We have lifted our 2017 GDP forecast from 1.6% to 1.9%. 2018 we revised only marginally up (from 1.7% to 1.8%) as we expect euro-induced export headwinds to counteract domestic strength. In H1 the economy expanded with an annualized rate of 2.6%. With EUR appreciation feeding through only gradually and capex picking up, GDP growth should slow only marginally in H2. 2018 kicks off with wage negotiation in key sectors. The strong labour market suggests wage settlements north of 3%, but the (classic) Phillips curve nexus is only weak and other factors could weigh. (Also included in this issue: German wage round in 2018, industry output forecast, The view from Berlin) [more]
August 31, 2017
Region:
62
During the past four years, prices for owner-occupied homes have risen by c. 30% and rents by 15% across Germany. So far, the government’s housing policy has hampered rather than promoted residential construction. A few weeks ahead of the German parliamentary elections we take a look at the housing policies spelled out in the election programmes of the six largest parties. There are several ideas to make it easier for people, in particular families with children, to buy homes. However, additional policy-induced stimulus for demand might push prices upwards, particularly since supply is relatively inelastic. In that case, any electoral gifts would not benefit the families, but only the property sellers. [more]
August 28, 2017
Region:
63
Since 2010, the German government’s tax revenues have gone up by one third to EUR 706 bn. On the face of it, Germany is a low-tax country, with a tax-to-GDP rate of 22.9%. The picture is misleading, however, because the German welfare state is largely funded by additional taxes, i.e. social security contributions. The overall tax burden on German citizens is higher than the OECD average and the tax structure in Germany is unfavourable. It would appear to make sense to flatten out the steep trajectory of rising marginal income tax rates for people in the lower and mid-range earnings brackets. Germany’s political parties are pledging to reform income tax in order to appeal to median voters and their core support. Overall, the amount by which the burden on taxpayers would be eased varies substantially across the parties. [more]
August 22, 2017
Region:
Analyst:
64
In Germany, the number of successful technology start-ups with a novel product is lagging behind in an international context. Considering the key role of start-ups in innovative entrepreneurship and their contribution to the real economy, reasons and key points of action to increase start-up activity should be identified. Excessive red-tape is a major hindrance and mainstream political parties are aiming to reduce excessive bureaucracy in start-up creation. Improved access to bank lending and venture capital investments are necessary to broaden post-launch funding alternatives. Brexit could be boon especially for the start-up scene in Berlin if relocation formalities are lowered. Enhancing a “can-do” culture and taking entrepreneurship among immigrants into account in policymaking have paramount importance, too. The Nordic start-up ecosystem provides important takeaways to boost start-up creation. [more]
August 8, 2017
Region:
65
Forecast for German Q2 GDP lifted to 0.8%. Strong private consumption boosts retail sales. Germany’s fiscal outlook: Goldilocks will not last forever. The view from Berlin: Asylum policy & refugee issues back on stage. [more]
August 8, 2017
Region:
66
Defence policy and defence expenditures have moved into the light of public attention ahead of September parliamentary elections, fuelled by US criticism of Europe’s NATO spending, the experience of the refugee crisis but also regained momentum for European integration. While NATO membership and EU defence integration is supported by the German public, a majority rejects an increase in the military budget. To reach NATO’s 2% of GDP target by 2024, defence expenditures would have to more than double within seven years. Mainstream parties agree that a more holistic security framework is required but they are divided on the details, in particular when it comes to the question on how much to spend for it. [more]
August 4, 2017
Region:
Analyst:
67
The results of the “diesel summit” are an interim solution at best. In view of the current negative sentiment towards diesel engines, diesel cars will stand a chance in the medium to long term only if the auto industry credibly demonstrates that it can keep emissions below the legal thresholds in real driving situations and in (almost) all weather conditions. If carmakers do not succeed in this endeavour, customers will increasingly turn away from diesel cars, as they fear excessive residual value losses or stricter regulation. [more]
July 19, 2017
Region:
68
In an international comparison, Germany’s fiscal situation is very good – thanks to robust GDP growth and zero interest rates. In the short to medium term, dynamic revenue growth should help to ensure that Germany’s fiscal situation remains comfortable, even though expenses look set to rise strongly as well. Public finances are currently benefiting from buoyant growth, low interest rates and a “demographic respite”. Rising interest rates and the ageing society look set to put the public finances under considerable pressure from the middle of the coming decade. However, the long-term fiscal risks do not appear to play a major role in the current election campaign. [more]
July 17, 2017
Region:
69
The debate over welfare policy in Germany appears to be paradoxical. Albeit steadily rising social spending, some critics believe that there is a social imbalance. But social security continues to have a positive impact while the welfare system is benefiting from the positive economic development. A further expansion of the welfare state is in the cards given not only the demographic trend but also the parties’ proposals in the current election campaigns. Sustainability of the welfare system is playing second fiddle only despite the fact that already taxpayers are burdened with avoidable costs. [more]
July 10, 2017
Region:
Analyst:
70
The German mechanical engineering sector recently tripled its growth forecast for 2017, from 1% to 3% (both in real terms). Robotics and automation is an important growth driver; this sub-segment is likely to increase output by 7%, i.e. double the rate of the segment as a whole. The mega issue “Industry 4.0” plays a key role for this development. As this trend is gaining importance both in Germany and around the world, the medium-term outlook for the sub-segment remains excellent as well. [more]
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