Ines Blaschke

German companies enter the new year with hope

German companies hope that the year 2020, after two years of continuously weakening economic activity, will bring about a turnaround for the better. This is shown by the current ifo survey: at the end of 2019, the climate in the German executive floors is better than it has been since the summer months. The clearer outlook for Brexit and the progress made in the trade talks between the USA and China are giving German companies a sigh of relief and increasing confidence for 2020. Above all, the troubled export economy can hope for a recovery of the global economy and better business. Nevertheless, it should not be overlooked that the business climate index is still not far from its multi-year low from autumn. There are still no signs of any really more dynamic growth. After all, the almost two-year slide should at least be over now. Growth in Germany is…

UK elections: the perfect blue wave

For over an hour now it has been clear what was already apparent last night in the exit polls: the Conservative Party, led by Boris Johnson, won the parliamentary elections with a large majority. The party managed to win 362 seats (plus 66), the largest absolute majority for the Tories since 1987, then under Margaret Thatcher. The Labour Party, on the other hand, suffered heavy losses, as did the Liberal Democrats. Jeremy Corbyn has already announced his resignation, while LibDems leader Jo Swinson has even lost her constituency. The only big winner alongside the Conservatives is the Scottish SNP, which has managed to make significant gains. Party leader Nicola Sturgeon has already announced that she will use this victory to push ahead with her plans for Scottish independence. The new parliament will look radically different. While the conservative faction is likely to become much more homogeneous and the inner-party quarrels…

ifo survey: Hope again at last

Companies in Germany are regaining hope. Particularly in the manufacturing sector, companies have been suffering from international burdens for more than a year. And on the most important issues – the US-China trade dispute and the risk of a „No-Deal-Brexit“ – progress has finally been made. Although no agreement has yet been reached, the risk of a failure of the negotiations on both issues has decreased significantly. This is good news for the German economy. The industry can at least stabilise at a low level, and the service sector is still running quite smoothly in view of rising incomes. The retail sector expects a good Christmas business. And the construction industry remains an important pillar of support for the domestic economy. The recession in Germany has been averted, and the German economy is likely to show at least slightly positive growth in the fourth quarter as well. However, a strong…

Weak economy, determined central banks

The swan song to the German economy came too early. The scenarios of doom and gloom, some of which had been spread in recent weeks, were exaggerated. The recession did not set in. Although growth in the third quarter was weak, it was positive. This also corresponds to the picture we had painted in our economic assessment. However, this increasingly put us in a minority position. Of course, growth in Germany is not satisfactory, the rate is only just above zero. The headwind from global trade caused orders in industry to break away, companies cut back production and wait for the time being to invest. Although consumer demand is stable and the construction industry can still hardly save itself from orders, this is not enough for a stable growth of the economy as a whole. To achieve this, international business will have to improve again, and a real turnaround is…

Great Britain and the Brexit

The back and forth in the Brexit process has caused great uncertainty in the UK in recent months. On the other hand, the British economy still achieved decent growth in the past quarter. With a plus of 0.3% compared to the previous quarter, the country not only avoided a recession sovereignly. GDP growth in the third quarter also slightly exceeded the quarterly result of the EMU and that of Germany probably even exceeded it quite significantly. And this despite the fact that the previous year’s growth rate of 1.0% was recently as low as it has not been for almost a decade: despite the threat of Brexit, the United Kingdom is far from being the worst performer among the G7 countries. A closer look, however, reveals the slowdown that the Brexit uncertainty has meanwhile left behind. In August and September, the economy shrank across almost all sectors. The relatively good…

German housing market: Prices rise somewhat more slowly despite falling interest rates

Prices on the housing market continued to rise in the third quarter of 2019. This is shown by the price index recently published by the Association of German Pfandbrief Banks. However, the rise in prices for owner-occupied homes and apartment buildings acquired by investors has subsided, especially in Germany’s seven largest cities. In 2017, residential property prices in the high-priced cities still rose at double-digit annual growth rates. Prices in these cities are now rising at less than 4 percent a year. Price dynamics are even more pronounced outside these conurbations. Between July and September, purchase prices for owner-occupied homes and apartment blocks rose by around 6 percent nationwide. For a long time, the metropolises raised real estate prices, while the „province“ slowed down – for over a year now it has been the other way round. There are various reasons for the slowdown in inflation. However, this is not…

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