Politics

European politics is becoming more important

It’s not so long ago that the European elections were no big deal and for many politicians Brussels was a comfortable place to end their career (voluntarily or not). This has changed a lot. The European Parliament and the European Commission have become important elements not only of European, but also of national politics. In the meantime, many political impulses come from Brussels, and the further development of the EU is orchestrated there in cooperation with the heads of government. It will, therefore, be all the more important to strengthen democratic legitimacy and to keep the influence of national interests within proper bounds. Against this background, a right of initiative for the European Parliament would be an important development. But this will no doubt be some time coming. In the last few elections we have seen an increasing divergence of political opinions. Parties at the extremes of the political spectrum…

Economics Minister lowers forecast to 0.5 percent – why?

In line with expectations, Economics Minister Peter Altmaier has once again lowered his forecast for economic growth in 2019 – from 1.0 to 0.5 percent. The Federal Government is therefore positioning itself more sceptically in its economic outlook than the economic research institutes in their joint diagnosis published just under two weeks ago. In the report commissioned by the Ministry of Economics, the institutes are forecasting a growth rate of 0.8 percent for the current year in Germany. This clear deviation from the cumulative and specially commissioned expertise of these economic think tanks is somewhat surprising. The reasons behind this may well be political, even though Minister Altmaier explicitly spoke out against a government stimulus package when presenting the forecast. At all events, it is not easy comprehending the economic rationale of the new forecast. The first quarter, that is hugely important for the full-year forecast, is already behind us,…

Finland: political shift to the left

For quite some time now, the political fringes have been gaining in strength in the elections in Europe. This trend is also very evident in Finland, where the Social Democratic Party (SDP) won the general election and is therefore the strongest party in parliament for the first time since 1999. It was followed closely in second and third place respectively by the right-wing populist Finns Party and the conservative National Coalition Party. The Centre Party of Finland of the (as yet) incumbent Prime Minister Sipilä is now only expected to be parliament’s fourth strongest party in the future, so that Sipilä clearly is the loser of this election. The Greens and the Left Alliance also made significant gains. The results reflect very strongly the topics that dominated the election campaign: aside from the Sipilä government’s strict austerity policy of reforms as well as higher levels of immigration in recent years,…

New Brexit deadline: Halloween

Brexit has been postponed again. This time until Halloween. However, the conditions are not favourable for Great Britain and one may continue to hope that the existing withdrawal treaty may still be accepted after all. Nor can one now any longer rule out political consequences for Theresa May. However, a no-deal Brexit is by no means off the table. A disorderly exit could even occur automatically. It could come as early as 1 June – at least according to the provisions of the resolution of the summit meeting – namely if Great Britain has failed to ratify the withdrawal agreement from the end of 2018 by 22 May or has not carried out the elections to the European Parliament at the end of May as required. To make the entire Brexit process a little more complicated, the new magic formula is “flextension,“ in other words Great Britain can always exit…

Euroland industry stuck in reverse gear

The stabilisation in the Euroland economic outlook that had seemed nascent since the beginning of 2019 is at risk from the ongoing difficulties in the industrial sector. This is shown by the current development of DZ BANK’s Euro-Indicator. Our economic leading indicator dipped again in March, by 0.2 percent, having recovered slightly in January and February 2019. While almost half of the individual indicators that feed into the computation of the Euro-Indicator tended at least slightly positively in the past month, the industrial sector made a clearly negative contribution. The deterioration in manufacturing purchasing manager sentiment had a particularly unfavourable effect. According to the Markit survey, in March the EMU industrial sector saw the largest business losses in almost six years. Moreover, production expectations in manufacturing have fallen for the fourth consecutive time. Amongst private households, by contrast, an essentially upbeat sentiment prevails. While they likewise do not rate the…

Rise in property prices in some countries has slowed

House prices continued to increase in the international property markets last year. The housing price index we compute for 20 countries also shows, however, that the price momentum has eased despite the widespread low interest rate level. That said, this does not constitute a general trend but points to developments running more in opposite directions. While the housing markets in some countries such as Germany, the Netherlands, and Portugal have really raced ahead, house prices have come under pressure in particular in places where for many years the tendency has been almost consistently upward. In Australia and in Sweden prices actually fell slightly. Given what will probably continue to be low mortgage rates, prices in most of the international property markets look set to rise further. However, the era of especially pronounced price increases seems to be over. Macroprudential instruments make property financing harder, high purchase prices weigh heavily on…

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