Insightperspectives January 1, 2016 v3

an all-time high of 31.2 in December from 29.2 in

November.

Germany is exposed to strong cyclical tailwind; the

economy will continue to see strong growth in the first

half of 2016 as Berlin is forced to boost public sector

spending to accommodate hundreds of thousands

refugees. The question, however, is how a left-leaning

Chancellor Merkel will finance soaring refugee-related

spending?

Another question is integration. So far, Mrs Merkel has

failed to tell the German voters that successful

integration of more than one million refugees means

sweeping economic reforms and cuts in welfare

benefits. This is in sharp contrast to the fact that

Germany recently launched a minimum wage.

These unanswered questions are beginning to impact

household sentiment, which was reflected in a survey

published in December. The survey showed that 83% of

all German households expect the economic situation

to get worse in the coming years - read the

article,

In 2016, consumer sentiment could worsen

even

when

households

realise

that

Chancellor Merkel's "wir schaffen dass" is rejected by

other EU member-countries – read the Die Welt

article,

Denmark – “No” is a message to Brussels and

Berlin

On December 3,

in the field of justice and home affairs; Denmark's

centre-right government had wanted to abandon some

of the existing Danish opt-outs within this field. There

are of course different interpretations of the outcome.

Nonetheless, this newsletter sees the outcome as yet

another

of the political establishment