Future overall economic development
Expected economic growth in Germany (all figures in %)
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MLP’s business operations focus on financial and investment consulting to discerning private clients in Germany. Over 98 % of our total revenue is generated within Germany’s borders. The development of the German economy and its legal framework conditions are therefore extremely important in terms of our business opportunities.
Based on the forecasts of economic research institutes, the global economy is set to recover in 2010 and 2011. Following two years of economic slump as a result of the financial and economic crisis in 2008 and 2009, global growth is now set to reach 6 % in 2010 based on estimates by the Organisation for Economic Cooperation and Development (OECD). Above all driven by recovering exports and economic stimulus packages, Germany’s gross domestic product is set to rise to a level of around 1.4 % according to estimates by economic experts. And growth of 1.9 % is expected for the year 2011.
Increasing unemployment
However, the return to positive growth in Germany is not likely to be accompanied by an increase in the number of jobs. Indeed, the OECD expects the unemployment rate to go up by 2 percentage points to 9.7 % by 2011. This translates to around 4.3 million unemployed people in Germany (2009: 3.3 million unemployed; 8.2 %). The anticipated economic upturn will therefore not rejuvenate the employment market. Set against this background, the OECD and leading economic experts are warning that increasing unemployment will lead to reduced tax revenues, while at the same time demanding greater social welfare payments. Both of these factors will have a serious impact on public funds, leaving little if any money available in Germany for economic stimulation measures over the course of the next few years.
Downturn in real income
Based on estimates of economic researchers, the disposable income of German citizens is likely to drop by 0.5 % next year in real terms. If oil prices continue to rise due to increased demand in the emerging markets – as forecast by the investment bank Goldmann Sachs – this is also likely to hinder rather than stimulate consumer spending among Germans. Legislative initiatives to stimulate the economy, such as the Citizens Relief Act or the Growth Acceleration Act, both of which are set to take effect in 2010, will at best only be able to reduce the load slightly.
General statement: Demand for medium and long-term provision contracts remains stifled
Even if Germany’s economic performance does indeed improve in the current financial year following the collapse in 2009, the fact that unemployment is on the increase and real income is in decline means that we are not expecting to see any appreciable growth impulses from the macroeconomic environment for our business. In fact, we expect people to remain cautious throughout the current financial year with regard to signing new medium and long-term oldage provision and health cover contracts or with the transfer of mandates in the field of wealth management to continue in the current financial year.
National economic influencing factors on MLP’s business development in the years 2010 and 2011
| 2010 | 2011 | |
|---|---|---|
| Expectations about economic situation in the future | 0 | + |
| Higher rate of unemployment | – | – |
| Stable savings rate | 0 | 0 |
| Higher consumer prices | – | – |