Politics

Partial lockdown puts economy under pressure

On Wednesday, under the impression of the rapidly increasing number of new corona infections, the Federal Government and Minister Presidents decided to impose a „partial lockdown“ from November 2. Restaurants and several service industries will have to close again for another four weeks, but this time stores will be allowed to remain open – subject to conditions. Schools and daycare centers will also remain open. For many businesses in the catering industry, this is of course the „worst case scenario“, even if generous compensation payments have been promised. Hard weeks are also dawning for the retail trade. Although there is hope that the Christmas business will not be completely lost. But the difficult circumstances are likely to deter many customers from their usual shopping spree and shift even more sales to online retailers. The desired effect of the reduction in VAT will therefore only benefit the stationary retail sector to…

World Savings Day 2020: Money investment backlog intensifies

The savings of private households in Germany have risen sharply in the last six years. Most recently, the savings ratio has once again shot up as a result of the Corona crisis. However, extremely low interest rates in combination with the traditional risk aversion of German private investors and rampant regulation of investment advice make it difficult to make a balanced investment. In addition, high real estate prices and restrictive building regulations are making it increasingly difficult to acquire real estate as an alternative to investing money. As a result, a growing investment backlog has built up and the proportion of uninvested funds in the form of demand deposits and cash is continuing to grow. The fact that, despite the corona crisis, private households did not engage in panic selling of securities in the first two quarters of the current year, and instead invested more funds in the form of…

Brexit: It ain’t over till it’s over

The October 15 deadline set by Prime Minister Johnson has passed. However, instead of breaking off the talks as announced, the Johnson government will probably continue to sit at the negotiating table with Brussels in the coming weeks. Once again, the realization of the past few years that even if the situation appears to be completely hopeless, it is still far from over. On several occasions, the parties involved have been on the verge of a hard break. And yet, so far they have managed to end Britain’s EU membership largely without upheaval, to negotiate a transitional phase and to discuss the shape of a subsequent free trade agreement – a fact that the negotiators and political representatives involved in the process can consider a success. It is not surprising that the path to this point has not always been straight or dominated by rational-economic aspects. After all, it is…

Youth unemployment is becoming a problem in the euro zone

The corona virus caused severe economic setbacks in economies around the world in the first half of the year. In the euro zone, extensive measures were at least able to protect the labor market from more serious distortions. But things are by no means going equally well for all age groups. Particularly in the group of under 25-year-olds, a fairly rapid increase in the EMU unemployment rate has been recorded since the lockdown measures starting in March. One of the reasons for the rapid deterioration in youth unemployment is the fact that companies in Corona times provide significantly fewer training places due to increased uncertainty. This poses a particular challenge to all those who left school after graduating in Corona summer and find it difficult or impossible to find an apprenticeship. In addition, fixed-term employment contracts are hardly ever extended in these uncertain times. The danger here is that these…

ECB remains on course

  The European monetary authorities agree that a substantial monetary stimulus is still needed. This is evident from the minutes of the Governing Council meeting of 9/10 September. While the latest economic data, in line with ECB projections, point to a strong recovery of economic activity, there are also significant downside risks. In this context, reference is made to the uncertainty about the further course of the corona pandemic and the increasingly likely no-deal brexit. The ECB will therefore adopt a wait-and-see stance for the time being and analyze further economic data very carefully. At the same time, however, the central bank heads emphasize their fundamental readiness to act should this become necessary in view of the future inflation path. In this context, they also have their sights set on the further development of the euro’s external value. In principle, they are prepared to adjust all available monetary policy instruments….

Fed-Minutes: Worries about delay of fiscal package

The FOMC minutes published yesterday evening show a positive assessment of the economic situation. However, this assessment should not hide the fact that at the time of the meeting of the Open Market Committee there was still justified hope for a further fiscal package before the US presidential election. These hopes were dashed when the negotiations on an additional aid package between Democrats and Republicans were halted. Against the backdrop of rising case numbers and unlikely fiscal stimuli, the guardians of the currency are now likely to express much greater concern. The latest speeches by various central bankers point to this. In the past few days, Powell and several other central bankers have warned that without further fiscal aid the US economy could slide back into recession. The FOMC members expressed satisfaction with the prospect of a zero interest rate policy until 2023, which is in line with the Federal…

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