Brexit

The outcome of the UK referendum on 23 June took the markets and politicians by surprise. The decision to leave the EU has economic and political consequences not only for the United Kingdom, but also for its partners in the EU and for the future of European integration. The uncertainty concerning the duration of exit negotiations and agreement on future relations between the EU and the UK are putting a strain on the European economy and are reducing growth prospects for 2017. EU member states, as well as individual industries, are affected by the UK's foreseeable exit to varying degrees. The pending regulatory requirements are immense and range from trade-related matters and access to the European single market (particularly important for the financial industry), to horizontal policies such as migration and social policy and domestic and security policies. Finally, it raises the question of whether the UK's exit will alter the remaining 27 EU members' countries' priorities regarding European policy, including further institutional steps towards stabilising the eurozone.

 

 

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13.01.2017
Outlook on the German housing market in 2017: Prices and rents in Berlin, Düsseldorf, Frankfurt, Hamburg and Munich
Abstract: Munich remains the most dynamic German city when it comes to property, with its fast-rising population and historically low vacancy rate likely to lead to further price increases for many years to come. Further price rises are also expected in Berlin, although the main factors at play here are the very buoyant labour market and the fact that prices and rents are still relatively low for a European capital city. Of the German cities that were analysed for this report, Frankfurt has shown the lowest increase in prices in the current cycle. However, we are now seeing a Brexit effect, which is driving up prices for family homes in particular. Sluggish rent growth and a high level of construction activity are the most striking trends in Hamburg, which could make the city more sensitive to interest rate movements than other urban centres. The situation is similar in Düsseldorf, where the vacancy rate in the current cycle is relatively high for a large German city. For every city analysed here and for the overall German housing market we anticipate further price increases in the coming years. All the macroeconomic conditions that might signal an end to the cycle – such as a turnaround in interest rate policy, a massive expansion of supply and/or a slowdown in migration to Germany – are not yet fulfilled and it is likely to be several years before they materialise. Consequently, we expect rents and property prices in the major German cities and across the country to continue to rise sharply in 2017.
Topics: Brexit; Cities; Germany; Housing policy; Prices, inflation; Real estate; Residential real estate
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21.12.2016
Focus Germany: Outlook 2017: Solid, despite diminished tailwinds
Abstract: German GDP growth is expected to slow somewhat in 2017 following considerable momentum over the last two years. We note the growth rate will almost half, to 1.1%, in 2017, but around half of this is due to a smaller number of working days. While the economy will likely have to do without a number of special factors that provided a boost to domestic demand in 2016, we believe that the underlying robust domestic economic growth path remains intact. Weak global trade and political uncertainty will dampen exports and investments. The ECB has in all but words indicated that tapering will begin in 2017. European interest rates are likely to remain at very low levels in 2017, at least at the short end.
Topics: Auto industry; Brexit; Business cycle; Commercial real estate; Construction industry; Economic growth; European issues; European policy issues; Exchange rates; Germany; Labour market; Macroeconomics; Migration; Monetary policy; Other sectors; Prices, inflation; Real econ. trends; Real estate; Sectors / commodities; Trade
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28.11.2016
Crumbs or pie – how much will Frankfurt's property market benefit from BREXIT?
Abstract: The question regarding the consequences of a Brexit for the EU, the United Kingdom and Germany is expected to remain unanswered for some time. The political uncertainties and exit scenarios range from a contentious separation to a second referendum. At present, however, we can expect that Frankfurt will be one of places to benefit most from a Brexit. In light of the differences between the size of London and Frankfurt, London's crumbs could become Frankfurt's pie. The relocation of jobs to Frankfurt is also likely to boost property demand. The additional demand potential is welcome on the Frankfurt office market because it will equalise structurally induced reductions in the financial sector and will tend to lead to further reductions in vacancies and increase rents. The assumed 5,000 office workers are likely to relocate to the highly priced sub-markets close to the city centre. However, as new building projects also focus on these sub-markets, positive demand effects will be diluted. Because of existing demand overhangs, disadvantages are emerging on the Frankfurt residential property market from a potential relocation of employees. Price growth and the shortage of housing will remain elevated for the foreseeable future. An additional 5,000 homes and a correspondingly elevated housing shortage are likely to drive prices up by more than EUR 100 per m². While purchase prices remain affordable thanks to low interest rates, they are strongly dependent on future interest rate developments.
Topics: Banking; Brexit; Cities; Commercial real estate; European issues; Germany; Global financial markets; Housing policy; Real estate; Residential real estate; Tax policy
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07.11.2016
Stability anchor Germany– most likely with Merkel
Abstract: Political risks in the months to come might increasingly take their toll on economic developments and investor sentiment (see accompanying article, “Uncertainty & animal spirits”). Up until recently, few people would have included Germany in this risk category.
Topics: Brexit; European issues; European policy issues
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04.10.2016
EU: Continuing in limbo, trying to stay on track
Abstract: The key issue on the EU policy agenda is mapping out a way forward for the EU27 after the Brexit vote. The annual State of the Union speech delivered by Commission President Juncker and the results of the informal Bratislava summit in September provide some indication, define key priorities and several specific suggestions for the next months. However, they mark but intermediate steps in a process. Further results are to be presented in March 2017.
Topics: Brexit; European issues; European policy issues
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30.09.2016
Think Local: What Brexit would mean for regional and cohesion policies in Europe
Abstract: Brexit affects regional policy both in the UK and in the EU27. It has a direct impact via financial adjustments for the individual funds, and indirect effects, possibly influencing the budgetary debates to come and adjusting regional policy priorities. However, the effects are highly contingent on the timing of Brexit and the planning processes and preparations for the new EU budget beyond 2020. The biggest stakes are potential changes to the structural funds which invest all across the EU. Finally, there is the issue of possible future cooperation between the EU27 and the UK after a Brexit. In principle, regional policy programmes already provide for some options here. However, the specific arrangements and conditions are only going to be defined as part of the negotiations to structure the new relationship.
Topics: Brexit; Economic policy; European integration; European issues; Fiscal policy; Key issues - nicht mehr verwenden!
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26.08.2016
EU budget: Who's to pay for Brexit?
Abstract: Brexit means that the EU is going to lose one of the largest contributors to its budget. The UK paid in a total of EUR 15.1 bn in the first two years of the current budget period 2014-2020, second only to Germany. This is a pattern similar to the previous budget period 2007-2013.
Topics: Brexit; Economic policy; European integration; Fiscal policy
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05.08.2016
EU Regional Policy: Changes after Brexit?
Abstract: The mid-term review of the EU’s multiannual financial framework 2014-2020 is scheduled for the end of 2016. The scenario of a Brexit taking effect in the upcoming years and the potential impact thereof might well be discussed as part of the review. However, given current uncertainties about timing and circumstances of the UK leaving the European Union, it is still too early to fully adapt accounts. Yet, two things seem certain for the time being: First, a Brexit taking effect during the second half of the budgetary planning period would certainly prompt the need for further adjustments. Second, it would also affect funding for regional and cohesion policy as one of the largest EU budgetary items.
Topics: Brexit; Economic policy; European integration; European issues; Key issues - nicht mehr verwenden!
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02.08.2016
Brexit and the EU investment plan: Where do we go from here?
Abstract: Is Brexit going to impact on the EU investment plan? The short answer is „yes“. But the more interesting question is how it is going to play out both on the day-to-day operations, progress with the plan and the future of the European Fund for Strategic Investments (EFSI) in particular.
Topics: Brexit; Capital markets policy; Economic policy; EMU; European integration; European issues; European policy issues
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07.07.2016
A European "generation gap"?
Abstract: One of the widely discussed patterns of the UK-referendum vote is its demographic distribution. Some surveys find that voters older than 65 were more than twice as likely to have opted for “leave” than those younger than 25 years. Demographic differences with respect to perceptions of Europe are not unique to the UK.
Topics: Brexit; Economic policy; European integration
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