Germany » Outlook

International Property Brokers forecast that in 2007 unemployment to fall to 9% (from 10.7% in 2006) and a further fall in 2008 to just below 7.8%.

The general government shortfall is likely to fall below 1% of GDP in 2007-08, as a result of strict management of the public finances and solid profits growth. GDP growth is forecast to decline from 2.7% in 2006 to 1.8% in 2007, due to an increase in value-added tax (VAT) rates, before improving to 2.2% in 2008 but inflation will linger low.

The league between the Christian Democratic Union/Christian Social Union (CDU/CSU) and the Social-democratic Party (SPD), headed by the chancellor, Angela Merkel (CDU), will last for the full governmental term.