According to the latest economists’ panel, jointly conducted by the Munich-based ifo Institute and the Frankfurter Allgemeine Zeitung, 71 percent of the German economics professors surveyed described Donald Trump’s influence on the global economy as negative while 64 percent stated that this also applied to the US economy.

“Trump remains a phenomenon: he cuts a remarkably poor figure in office, and yet the US economy is performing well. This may be because Trump has implemented very little of his political programme to date,” said Niklas Potrafke, who supervises the panel and is Director of the ifo Center for Public Finance and Political Economy.

The 130 German economics professors, who took part in the survey, were very critical of Trump’s policy across the board. His policies for healthcare, protecting the environment, maintaining peace and security were rated poorly in the survey. German economists also believe that Trump’s policies have negative implications for social justice. This was in line with most of the survey participants’ expectations.

They saw the implications of Trump’s policy for employment as more or less neutral; and assessed his influence on the economic climate somewhat more favourably, although still slightly negative. German economists clearly rejected Trump’s trade policy.

Survey participants expect the lower and middle-income earners to emerge as the losers of Trump’s policies while high earners stand to gain. The prevention of illegal immigration was the only area in which economists’ responses were positive on balance.

Many German economists dislike Trump’s style, which was described by several survey participants as ‘disastrous’.

The measures taken by the Trump government are ‘airy-fairy, contradictory and naïve’ writes the trade economist Rolf Langhammer.

The Freiburg-based finance expert Bernd Raffelhueschen, by contrast, favours a more relaxed approach to Trump’s policies. In his view, things are rarely as bad as they seem.

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The CDU/CSU wants the current marginal tax rate of 42 percent to apply only for taxable annual incomes of more than 60,000 euros. They also want to reduce the bulge in the tax burden for medium incomes. The ifo Institute based its model calculations on the plans of the Small and Medium-Sized Business Association of the CDU/CSU, which call for a reduction in the marginal tax rate at the “kink point” of 24 to 20 percent. These plans also relieve incomes from about 8,820 euros a year, but to a significantly less extent than for higher incomes. Thus, a single person with 30,000 euros of taxable annual income would have a yearly tax savings of 744 euros, while a single with 60,000 euros of annual income would save 1,637 euros in tax. As a result of these tax reductions, state revenues would decline by around 22 billion euros.

The SPD also wants the highest tax rate (42 percent) to be applied only for incomes exceeding 60,000 euros. Between 60,000 and 76,200 euros, however, the Social Democrats want to introduce a new progression zone in which the income tax rate would rise to 45 percent. In addition, the SPD would like to burden higher incomes more heavily by increasing the top marginal tax rate to 48 percent. Households with an annual taxable income of 60,000 euros would benefit the most. Those with more than 86,000 euros would expect to pay more, a single household with 100,000 euros income would pay about 450 euros more in taxes per year.

The Greens’ election platform calls for raising the tax free allowance and increasing the top tax rate for incomes of more than 100,000 euros. Concrete proposals regarding the tax scales are lacking, however. The ifo Institute therefore assumes an increase in the tax free allowance to 10,820 euros and a lifting of the top tax rate to 45 percent for incomes above 100,000 euros.

The Left wants to raise the tax free allowance to 12,600 euros. Accordingly, singles with 20,000 euros of taxable income would save about 1,200 euros per year. The party also wants a longer rise in the second progression zone, so that with incomes of 70,000 euros a 53 percent a tax rate would apply, matching the top tax rate that prevailed during Helmut Kohl’s chancellorship. For single households with an income of 77,000 euros, the tax savings from the increase in the tax free allowance and the raised tax rates for high incomes would balance out. In addition, the Left plans a two-stage wealth tax with tax rates of 60 percent starting from 260,533 euros and 75 percent for more than a million euros. According to the ifo calculations, single income-millionaires would pay about 138,000 euros more in tax per year. Overall, the tax plans of the Left Party would yield annual reduced income of about 7.6 billion euros for the state.

The FDP wants to “move the tax scale to the right” and flatten the tax “bulge” for medium incomes. The FAZ/ifo Tax Calculator has modelled this with a shift of the two kink points by 5,000 euros each. This implies that the tax rate will rise more slowly from 14 percent to 24 percent and, in addition, the top tax rate (42 percent) will only apply to incomes of more than 59,057 euros. As a result, single households with an income of 30,000 euros will save 587 euros a year. Households with 60,000 euros will save 1,214 a year. According to the FAZ/ifo Tax Calculator, the FDP’s plans would reduce the state’s tax revenues by 17 billion euros.

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The German current account surplus is mainly attributable to trade in goods; in the first half of the year alone, a surplus of €134 billion was achieved here. The main driver was demand from the other countries of the euro area, the other EU countries and from the United States. Also contributing to the surplus were yields from the assets invested outside Germany and earned income by Germans abroad totalling some €20 billion. Transfer payments abroad, for example to international organisations, reduced the surplus by €27 billion.

However, in the current year Germany’s surplus will fall to 7.9 percent of annual economic output, after 8.3 percent in 2016. This is mainly due to energy prices. The prices for imported oil and natural gas are expected to be higher than in the previous year despite the appreciation of the euro, which will increase the nominal import of goods and will reduce the surplus. From 2013 to 2016, in contrast, the opposite effect was observed: a sharp fall in oil prices that increased the current account surplus by 1.4 percentage points during this period. The EU considers a maximum of six percent as sustainable in the long term.

The Chinese current account surplus is also due to goods trade. By June, goods worth €200 billion net were exported. This means that the Chinese goods surplus is significantly higher than that of Germany. However, in the first half of 2017, China was a demander of services from abroad worth €125 billion.

By definition, capital exports are the portion of the savings of a country that is not invested domestically. High net capital exports mean that Germany is building up more financial claims against foreign countries than foreign countries are against Germany. A current account surplus is always accompanied by net capital exports, since the sale of goods or services to foreign countries must be accompanied by higher financial claims against foreign countries. Income from foreign assets also increases the current account surplus, since this increases the payment claims from foreign countries.

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Negative interest rates threatened 18.9 percent of the companies, according to the survey. 48.9 percent of the firms then began to negotiate with their banks. 36 percent of the companies switched to a bank that does not charge negative interest. 30 percent made shifts to other financial assets or repaid loans and 29 percent redeployed the money within their companies. Those that increased or brought forward investments totalled 11 percent. Negative interest rates were accepted by only 8 percent; 4 percent increased their cash holdings.

Companies confronted most with negative interest were in Saxony (29.8 percent), Bavaria (23.0), Thuringia (21.3), Hamburg (20.8), North Rhine-Westphalia (19.6) and Mecklenburg-Vorpommern (19.2).

The least affected were small companies with fewer than 50 employees (10 percent). For medium-sized enterprises, this figure was 26 percent and for large companies with at least 250 employees it was 29 percent.

Negative interest rates strongly affected the earnings situation of 8 percent of the firms, less strongly for 39 percent and insignificantly or not at all for 53 percent.

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According to the forecast, the number of persons employed is expected to increase from 43.6 million in 2016 to 44.62 million this year and to 44.6 million in year to come, to the highest level ever. The number of unemployed will decline from 2.7 million last year to 2.5 this year and to 2.4 million in the coming year. The unemployment rate will fall from 6.1 percent to 5.7 percent this year and to 5.5 percent in 2018. Prices, however, will increase clearly more strongly than before. The inflation rate will jump from 0.6 percent to 1.7 percent this year and to 1.6 percent in the coming year. The budget sur-plus will decline from 26.4 billion euros to 19.1 billion in this election year but will then increase again to 22.9 billion euros in 2018.

 The surplus of the current account (exports minus imports of goods, services and transfers), the subject of harsh international criticism, will increase in absolute figures from 261 billion to 265 euros in 2017 and to 279 billion euros in 2018. Its share of economic output, however, will remain largely stable at around 8.3 percent.

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“We are extremely pleased, together with our partners, to lend more weight to the voice of researchers in influencing the further development of the European Union,” commented ifo President, Clemens Fuest. “The EconPol Europe collaboration will provide additional impetus to research on European issues and will broaden and intensify the economic and fiscal policy debate at the European level.”

The foundation of EconPol Europe was made possible through the initiative of the German Federal Ministry of Finance (BMF) to expand cross-border research and scientific cooperation in Europe. The Ministry of Finance is convinced that governments and European institutions are increasingly in need of scientific support in the form of analyses and innovative reform proposals. The ifo Institute was commissioned by BMF to set up this network which will pursue its research agenda independently.

With its cross-border cooperation in economic and fiscal issues, EconPol Europe will make evidence-based contributions, especially with regard to the successful further development of the European Economic and Monetary Union (EMU). Its main tasks are interdisciplinary research in the areas of sustainable growth and best practice, EU policy reform and the budget, capital markets and financial services regulation as well as governance and macroeconomic policy in the monetary union. It will also convey its research findings to the relevant target groups in government, business and academia as well as to the general public.

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China ranks second with an anticipated current account surplus of $245 billion. The USA, by contrast, is expected to show the biggest capital imports in the world, with a deficit of $478 billion for 2016.

Current account surpluses (goods, services, interest rates, wages and transfer payments) mean capital exports, while deficits represent capital imports.

Germany’s current account surplus is expected to have risen to 8.6 percent of its annual economic output in 2016, versus 8.3 percent in 2015. The EU sees a maximum figure of 6 percent as sustainable in the long term.

Germany’s current account surplus is mainly due to trade in goods, which generated a surplus of €255 billion up to November. The key driver was higher demand from the rest of the euro area, as well as from European countries outside the EU. On balance, foreign-source income was positive up to November at €53 billion, meaning that German received net wage and interest payments from abroad. Services and transfer payments represented a negative contribution of €66 billion.

The increase in Germany’s net foreign assets is primarily reflected in the rising volume of foreign securities acquired by Germany; its net purchases totalled €193 billion by November of last year. Its foreign direct investments, by contrast, amounted to a mere €18 billion.

The US current account deficit is primarily due to trade in goods, with net imports totalling $557 billion dollars by the end of the third quarter of 2016. On balance, the deficit is particularly high in goods traded with Asia. The balance with the euro area, however, is also negative; with net imports from Germany accounting for half of the US deficit. Transfers of $120 billion also had a negative impact up until the end of the third quarter of 2016. Services and foreign revenues were positive on balance at $306 billion.

A current account surplus goes hand in hand with net capital export. In a country with net capital export, domestic savings are higher than domestic investments and the country accumulates foreign assets. Conversely, a current account deficit implies that a country is absorbing more than it is producing and accumulating foreign debt.

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