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Germany Monitor

In the "Germany Monitor" series we address political and structural issues which have great significance for Germany. These include commentaries on elections and political decisions, as well as technology and industry issues, and macro-economic topics which go beyond the business cycle matters addressed in "Focus Germany".

98 Documents
March 14, 2019
Region:
The house price cycle in Germany should remain in place in 2019. But we expect much more divergence across regions and a heavily increasing complexity of causal impact channels. Led by immigration and the continuous labour market uptrend, house prices and rents will likely continue to rise. The risk of overvaluations and a full-blown price bubble in the German housing market is rising. However, the price uptrend is likely to continue for years to come, in Germany as a whole and in most major cities. In this report we look at the housing markets in Munich, Berlin, Frankfurt, Hamburg, Düsseldorf, Stuttgart and Leipzig and we comment on the German office market. [more]
1
March 5, 2019
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Saving money is near and dear to Germans. Remarkably, Germans increase their saving rate in the second half of retirement. Those aged 75 and older save for a potential emergency situation and in order to bequeath and thereby improve their heirs’ living conditions. High intergenerational transfers might affect wealth distribution in a society in the long run. In 2018, banks in Germany benefited from record volumes of new retail loans (EUR 48.9 bn) and net flows into household deposits (EUR 108.7 bn). Mortgages accounted for the lion’s share of new loans. Consumer lending was above average in 2018, but lost momentum in the last quarter. [more]
2
February 12, 2019
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Analyst:
Robo-advice is a new breed in asset management. Robos’ assets under management have been growing quickly in Germany. However, the market is increasingly becoming concentrated and competitive. Robo portfolios have shown relatively robust performance recently. Yet the high costs of robo-advice in Germany are a drag on returns and may alienate potential customers. Current clients, meanwhile, are mostly middle-age, higher-income men rather than millennials. [more]
3
January 30, 2019
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Analyst:
During the current cyclical upswing, which started in 2010, German manufacturing companies have increased their real gross capital expenditure by just above 3% p.a. In 2017, the industry accounted for 51% of total other capital spending (intellectual property) in Germany. This shows that manufacturing is the most important driver of research and development and thus of technical progress. The automotive and the pharmaceutical industries stand out from other sectors. The capital stock in energy-intensive industries has been shrinking for years now – a trend that gives cause for concern. While the German manufacturing industry is faced with long-term challenges, we believe that it is nevertheless sufficiently adaptable to remain competitive on a global scale. [more]
4
November 8, 2018
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Analyst:
With digitalisation becoming an ever more common feature along the value chain, the German industry looks set to enjoy higher potential growth in the coming years. The additional gross value added in German manufacturing might total EUR 70–140 bn for the years between 2018 and 2025. As a rule, the industrial sector is in a better position than numerous (personal) services sectors to benefit from the favourable impact of digitalisation. Traditional capital goods producers, such as the auto industry or mechanical and electrical engineering, are likely to see their gross value creation benefit more strongly from digitalisation than the metals or chemicals sector. [more]
5
October 19, 2018
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German households hold a higher share of their savings in bank deposits than their French or British peers. But their portfolios are more diversified than perception suggests if all low-risk/low-return investments are taken into account. They invest meaningfully in stock markets, both directly and indirectly. The recent upward trend though may be driven by the low interest rate environment. In Q2, household lending in Germany continued to grow dynamically at 3.8% yoy, driven solely by mortgage loans. However, mortgage growth has not increased much recently despite the benign economic situation and booming real estate markets. Consumer loans declined for the first time in five years. Meanwhile, deposits saw exceptionally large inflows, with maturities shortening further. [more]
6
September 14, 2018
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Since the last corporate tax overhaul in 2008, the need for reform has been continuously building in Germany. Given the ongoing criticism of Germany's current account surpluses, a reduction in corporate taxes would be a strong signal to provide new impulses to the sluggish domestic investment activity, thereby addressing a key issue of the current account discussion. The international trend towards lower tax rates also needs to be addressed, if Germany is to retain its competitiveness as a site for investment, innovation and jobs. [more]
7
July 25, 2018
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The number of FinTech start-ups in Germany has surged in recent years. They are mostly active in crowd funding and payments. Online payment schemes offered by FinTechs or BigTechs have already become the most popular way to pay for internet purchases. Meanwhile, the biggest focus of blockchain start-ups in Germany is on financial services. Many FinTechs cooperate with banks which like them for their innovative solutions. [more]
8
February 8, 2018
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The four-month deadlock following the inconclusive German federal elections was brought closer to its end with the coalition agreement between the CDU/CSU and the SPD. The last hurdle to Merkel's re-election is now the SPD membership ballot which is expected to give its approval, though at a thin margin. The agreement foresees significant investment in infrastructure and education but caters too much to permanent spending on social and pension policy given the largely cyclical nature of the budgetary leeway. Europe is supposed to take centre stage in the would-be coalition's policy – a signal which matters for Martin Schulz but less so for the member ballot and the German voter. The coalition commits itself to the transformation of the ESM and more spending on Europe but the red lines will only emerge when the details will be tabled. Surprisingly, the SPD will hold most of the major portfolios in the cabinet. With the foreign and the finance ministry the SPD got hold on the key portfolios for shaping the European policy course, although the key decisions will still be left to the chancellor. [more]
9
January 26, 2018
Region:
Metropolitan areas in Germany are booming. The current real-estate cycle started in 2009 and has led to significant price increases for residential property in many cities. Prices for apartments have as much as doubled in some cities. Strong population and employment growth and declining unemployment rates are driving demand, and supply elasticity is low. Overvaluations are rising, and the risk of a price bubble in the German housing market is increasing. The price uptrend is likely to continue for several years, at least in most major cities in Germany. [more]
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