Germany

Small and medium-sized businesses feel the effects of economic slowdown

The clouding over of the German economy has now also reached SMEs. This is shown by the results of the new SME study by DZ Bank and BVR. Business expectations have plummeted compared with the spring: The balance of expectations fell from 24.1 points in spring to only 0.4 points. This means that the optimistic and pessimistic business prospects of the medium-sized companies surveyed are now almost in balance. The assessment of the business situation did not decline so significantly. However, it fell for the third time in a row. SMEs in export-oriented industrial sectors in particular assessed their business situation significantly weaker than six months ago. The main reason for the current deterioration in sentiment is the consequences of the global economic slowdown. These also ensured that SMEs reduced their foreign commitments for the third time in succession. Nevertheless, more than half of them are still active abroad, which…

Economic slowdown reaches banks‘ lending business in Germany

The economic slowdown in Germany has now also reached the lending business. The extremely dynamic growth of banks‘ customer loans has slowed recently. From the end of September 2018 to the end of September 2019, loans to companies, private households and the state rose by 4.0 percent to EUR 2,928.2 billion. The strongest growth was again recorded in corporate loans. However, the increase slowed compared to the middle of the year. On the other hand, growth in private housing loans remained stable at a high level. The economic environment, which is characterised by a weakening industry, but a persistently good construction sector, is also reflected in the expectations of banks for the coming months. Most of them expect demand for corporate loans to fall and are planning to tighten their credit guidelines for these customers. The banks are more optimistic about the demand for credit from private households, for whom…

Industry continues to weigh on the mood of purchasing managers in the euro zone

  The data from IHS Markit’s November survey of European purchasing managers certainly does not indicate a mood of optimism. The comprehensive composite index fell by 0.3 points to 50.3 index points. Although the index for industry was able to gain, at 46.6 points it remained well below the neutral mark of 50 points. Industry is still suffering from declining demand, especially from abroad. However, the service sector, which is still growing, is increasingly threatened by the ongoing crisis in the industry. Here, employment intentions hardly increased at all. At 49.2 points, the German composite index remained below the neutral mark of 50 index points despite an improvement of 0.3 points. The mood among service providers declined slightly and was lower than it had been for more than three years. By contrast, the industrial index rose. Nevertheless, at 43.8 points, the index for industry remains below the growth threshold of…

The SPD has decided – the beginning of the end of the grand coalition?

  In the SPD, the opponents of the grand coalition win the member survey. This could be the beginning of the end of the government. Germany will suffer, France and possibly the USA could benefit. New elections in the current environment entail many risks, but also the chance for a Schröder effect. The SPD members have elected the new party leaders in a run-off election. With Saskia Esken and Norbert Walter-Borjans, the two candidates were elected who spoke out in favour of a quick end to the grand coalition. Instead, the two chairmen are aiming for a government to the left of the centre. The election itself was close. Esken and Walter-Borjans received 53% of the votes, Finance Ministers Scholz and Klara Geywitz received 45%. This couple had started with the goal of successfully continuing the coalition. The turnout was only 54%. Obviously, the long election process had tired the…

Euro area inflation rate leaves three-year low

  In November, the inflation rate rose again somewhat. According to the flash estimate, consumer price inflation in the euro zone was 1.0% last month, after 0.7% in the previous month. This rise in inflation is due to stronger dynamics in the prices of unprocessed food and services. The price development of other goods remained moderate. By contrast, energy prices fell again by a similar amount as in the previous month. This is mainly due to the lower crude oil price compared to the previous year, which was reflected in the petrol stations. The rate of inflation has recently accelerated somewhat in all major member states. In Germany and France the annual rate rose from 0.9% to 1.2%. In Spain the rate rose from 0.2% to 0.5% and in Italy from 0.2% to 0.4%. Overall, however, inflation in the euro zone remains subdued despite the recent rise. In the case…

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…

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