Data and News

Financial managers in German cities and municipalities see a need for improvement in the allocation of state funding. That’s according to an analysis by the ifo Institute from the KfW Municipal Panel. “Treasurers in Germany are particularly often in favor of simpler application procedures and fewer reporting and documentation requirements,” says Sarah Necker, Director of the Ludwig Erhard ifo Center for the Social Market Economy in Fürth.

Military goods from the EU are continuing to reach Russia via third countries – despite the extensive sanctions. More than a third (36%) of the sanctioned goods that reach Russia are transported via Turkey. China accounts for almost a quarter (23%), followed by Hong Kong (16%), and the United Arab Emirates (10%). “Since the beginning of 2024, the EU has significantly tightened and expanded export bans to Russia. As a result, we are seeing less circumvention of sanctions via third countries, even though sanctioned military goods from the EU are still reaching Russia via roundabout routes,” explains ifo trade expert Feodora Teti.

The problem of finding skilled workers has eased somewhat for companies in Germany, as the latest ifo Business Survey concludes. According to the survey, 22.7% of companies have a shortage of qualified workers, down from 25.8% in October, the lowest level in five years. “Weak economic development is continuing to play a role,” says ifo researcher Klaus Wohlrabe. “At the same time, technological change, especially artificial intelligence, is increasingly altering the labor market.”

The population in Germany is likely to decline by around 10% by the year 2070. Previously, a decline of 1% was expected. This is the result of an analysis of current population calculations by the Federal Statistical Office. “The increased decline and aging of the population already need to be taken into account today in political decisions with a long-term effect, for example, in health and care,” explains Joachim Ragnitz of ifo Dresden. Accordingly, not only is the shortage of skilled workers likely to worsen, but statutory pension insurance is also likely to come under even greater pressure.

Sentiment in residential construction in Germany improved somewhat at the start of the year, with the business climate rising in January from -22.7 to -20.9 points. Companies were somewhat more satisfied with their current business, and business expectations were also brighter. “The construction industry continues to be on hold,” says Klaus Wohlrabe, Head of Surveys at ifo. “It will take patience before the increase in residential building permits translates into orders.”

As geopolitical tensions rise, Europe’s dependency on imported semiconductors has moved to the center of policy debates. The EU Chips Act was designed to address this vulnerability by strengthening Europe’s role in the global semiconductor ecosystem. Yet several years into the initiative, it is becoming clear that it has been a failure. In a recent Opinion, Clemens Fuest, Oliver Falck, and Daniel Gros analyze Europe’s dependency on imported semiconductors. They argue that a more focused EU Chips Act and a stronger use of Europe’s strategic strengths would improve resilience.