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November 16, 2020
The pandemic has shown how the ‘haves’ are more resilient than the ‘have-nots’. Much of this is based on the gap between the two groups based on their access to technology. The divide in the US runs deepest along race and location (urban versus rural). To narrow this gap, we lay out our vision to develop an initiative that covers the more than half of households without proper broadband connection and a computer. [more]
November 11, 2020
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Analyst:
The European Green Deal labels the goal of climate neutrality by 2050 as a growth strategy where no one is left behind. This is akin to squaring the circle. In the next few years, we will see whether we, as a society, are ready for an honest democratic discussion about climate neutrality. We will have to deal with inconvenient questions and inconvenient truths. But if this discussion does not take place, climate neutrality will remain a just topic for fine speeches and promises – and nothing will be said, much less done, that could hurt anybody. [more]
November 6, 2020
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The corporate sector in Germany and particularly SMEs have become more resilient in terms of funding which should help them weather the corona shock. Current financing conditions also remain favourable: banks have hardly tightened lending standards, the government has issued unprecedented credit guarantees and the ECB is eagerly buying corporate bonds. Nonetheless, corporate insolvencies will rise as a result of the deep recession. Because the government has temporarily waived the obligation to file for bankruptcy, insolvency numbers have continued to fall until now but this may change soon. Rising loan losses will have a significant impact on German banks which are already exhausted by years of zero interest rates and low structural growth. With loan loss provisions possibly tripling, the banking industry will probably record a net loss this year. [more]
November 2, 2020
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Q3 GDP surprise: A rear mirror view – but obstacles right in front. With the partial lockdown during November, the economy will almost certainly see another negative quarter, even in an optimistic scenario where restrictions succeed in squashing new infections and will be completely abolished by the end of November. Prepare the German healthcare sector for regional bottlenecks – protect risk groups better: The number of patients in intensive care and hospital capacity is just as important as the number of new infections. We estimate that 400,000 acutely infected patients are the limit for intensive care units. (Also in this issue: inflation outlook, German labour market, corporate insolvencies, German auto industry, global construction industry, German corona policy, open borders in the EU) [more]
October 19, 2020
The trend towards 'localisation' leaves few easy options for large companies. Their huge advantage from global supply chains and businesses, built up during the last few decades of globalisation, may unwind unless they adapt to local- or multi-local business models. The urgency to adapt has been turbocharged by covid-19. [more]
October 8, 2020
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After the summer break new cases have picked up strongly in most of Germany’s neighboring countries. In many cases (France, Spain, UK, Netherlands, Poland, Czech Republic), numbers are (by far) exceeding the peaks reported in spring or are back at these levels (Belgium, Austria). Various governments have introduced new measures, such as Paris shutting down parts of the hospitality and leisure sector, and Spain ordering a partial lockdown in Madrid, albeit not as encompassing as in April. In other countries, social distancing and mask-wearing rules have been tightened or are being discussed. [more]
October 2, 2020
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The sizeable fiscal gaps in 2020/21 caused by the corona pandemic – which, just at the federal government level, are reflected in record new borrowing of around EUR 218 bn and EUR 96 bn, respectively – are a harsh setback for ensuring long-term public debt sustainability. In this week’s debate on the federal budget Finance Minister Scholz assured that no fiscal action in response to the crisis would be more expensive than fiscal action. But for the next federal government this appraisal might also hold true – but then with respect to fiscal consolidation. [more]
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