Germany’s Flats Set to Shrink as Decades-Long Expansion of Living Space Comes to an End

For the first time in decades, the steady expansion of living space in Germany appears to be coming to an end. According to a recent analysis by the German Institute for Economic Research (DIW Berlin), the average size of flats has reached a turning point and is expected to decline in the coming decades. After growing consistently since the 1960s, the trend is now reversing as new residential developments become increasingly compact.

Official statistical data show that the average flat size in Germany rose from around 69 square metres in 1965 to approximately 94 square metres today. Over the same period, living space per person more than doubled, increasing from just under 20 square metres to more than 49 square metres. However, researchers note that since around 2005, newly built flats have begun to shrink, a development that is expected to gradually influence the overall housing stock.

The study, conducted by DIW researcher Konstantin A. Kholodilin together with Sebastian Kohl from the Free University of Berlin, suggests that by 2050 the average flat size in Germany could be around six square metres smaller than it is today. While the existing housing stock is still dominated by larger apartments, the continued construction of smaller units is likely to reduce the national average over time.

According to the authors, demographic change is a key driver behind this shift. The share of single-person households in Germany has doubled since the 1960s and now stands at around 41 percent, reaching close to 50 percent in major cities such as Berlin and Munich. At the same time, sharply rising property prices since 2010 have made larger flats increasingly unaffordable for many households. As a result, smaller apartments have become more economically viable for both buyers and developers.

The trend is not unique to Germany. Similar developments have been observed in other industrialised countries, including Belgium, Japan and Norway, where new homes began shrinking around the turn of the millennium. France, Poland and Russia followed a few years later, indicating a broader structural change in housing markets across advanced economies.

Researchers argue that the shift towards smaller flats should not be seen as a deterioration in housing standards. Instead, they describe it as an adaptation to changing social and economic realities. Well-designed, compact and energy-efficient apartments are expected to play a central role in future housing supply, particularly as policymakers seek to reduce energy consumption and emissions in the building sector.

While the long-term dominance of large flats in Germany’s housing stock remains evident, the study suggests that the gap between household needs and available housing is narrowing. As new developments continue to prioritise efficiency and affordability, the era of ever-expanding living space in Germany may be drawing to a close.

Source: DIW

Household spending rises as savings edge lower in the Czech economy

Economic data for the third quarter of 2025 indicate a gradual shift in household behaviour and mixed signals from the corporate sector in the Czech economy, according to newly released figures from the Czech Statistical Office.

Households recorded a modest improvement in their overall financial position during the period. After adjusting for seasonal effects, income rose slightly compared with the previous quarter, while spending increased at a somewhat faster pace. As a result, the share of income set aside rather than spent edged lower, continuing a trend that has been visible for several quarters and bringing saving behaviour closer to patterns seen before recent economic disruptions.

On an annual basis, household earnings showed moderate real growth, supported by rising pay from employment. Average monthly earnings exceeded CZK 51,000, reflecting gains both compared with the previous quarter and the same period last year. Consumer spending per person also expanded, with year-on-year growth clearly stronger than the quarterly increase. Alongside this, households slightly increased funds allocated to longer-term assets, suggesting a cautious but improving outlook.

In the business sector, results were more nuanced. Companies experienced a small decline in profitability compared with both the previous quarter and a year earlier, while personnel-related expenses rose markedly over the year. Despite these pressures, businesses increased their spending on fixed assets compared with the second quarter, although overall investment intensity remained below last year’s level.

The statistical office also updated its assessment of overall economic output. The revised figures show that the economy expanded solidly during the third quarter, with growth recorded both compared with the previous quarter and on a year-on-year basis.

Taken together, the latest data suggest an economy in which households are gradually becoming more willing to spend as incomes improve, while companies continue to invest selectively amid higher costs and slightly weaker margins.

Financial review offer raises proportionality questions for very small businesses

An advisory firm has proposed a multi-year financial verification covering the 2022–2024 period, structured as a remote review with an option for on-site work at additional cost. The assignment would examine the accuracy of accounting records over three full financial years, with a fixed fee per year and full prepayment required. Travel and other out-of-pocket expenses would be charged separately.

In headline terms, the total cost of the engagement amounts to PLN 34,000 net. Within the broader Polish advisory market, this level of pricing is generally consistent with entry-level, finance-only due diligence mandates, particularly where three historical periods are reviewed. Publicly available benchmarks indicate that basic financial reviews often fall within a wide range, while more comprehensive, multi-disciplinary assignments typically command significantly higher fees.

However, the assessment changes when the size and activity level of the underlying business are taken into account. In this case, the company in question is very small and currently generates little or no income. For such entities, market practice in Poland tends to favour more limited and lower-cost forms of verification. Typical services for micro-enterprises include basic compilations of accounts or narrowly defined agreed-upon procedures, usually priced at a fraction of the cost associated with transaction-driven due diligence.

Market comparisons suggest that, for businesses with minimal operations, multi-year financial checks are commonly delivered at substantially lower price points unless there is a pending transaction, financing event or material risk exposure that justifies a more extensive review. Against this backdrop, a PLN 34,000 fee may be seen as disproportionate to the economic scale and risk profile of a dormant or low-activity company.

Beyond pricing, advisors note that clarity around scope and outputs is critical. Standard market practice would typically require explicit definition of deliverables, methodology, timelines, team composition, liability provisions and exclusions, particularly where the work is not intended to substitute for a statutory audit. Without such clarification, it can be difficult for clients to assess whether the resulting report will be suitable for decision-making or third-party reliance.

Overall, while the proposed fee level aligns with market norms for finance-only due diligence in mid-market situations, its suitability for a very small, non-income-generating business is less clear. In such cases, a narrower and more proportionate form of financial review is often considered sufficient, with more extensive work reserved for scenarios where transaction value or financing requirements warrant it.

Poland’s Inflation Slows to 2.4% in December, Flash Estimate Shows

Consumer prices in Poland increased by 2.4% year on year in December 2025, according to a flash estimate released by Statistics Poland. On a month-on-month basis, prices remained unchanged compared with November, indicating a stabilization at the end of the year .

The flash estimate places the overall consumer price index (CPI) at 102.4 compared with December 2024, while the monthly index stood at 100.0. Over the full January–December 2025 period, consumer prices were on average 3.6% higher than in the corresponding period of 2024 .

Price developments differed across major categories. Food and non-alcoholic beverages recorded a 2.4% annual increase in December, matching the overall CPI, while electricity, gas and other fuels rose by 2.8% year on year. In contrast, prices of fuels for personal transport equipment fell by 3.1% compared with December 2024, reflecting continued volatility in energy and fuel markets .

The accompanying chart shows that annual inflation in December remained slightly below Poland’s inflation target of 2.5%, continuing the downward trend observed over the second half of 2025. Statistics Poland noted that the flash estimate is preliminary and may be revised when final data are published .

The statistical office also confirmed that, starting with data for 2026, the CPI will be calculated using the international COICOP 2018 classification, which may affect the presentation and comparability of future inflation data

New residential district could be developed in the northern part of the Dubina area in Pardubice

A new residential district could be developed in the northern part of the Dubina area in Pardubice, according to long-term urban planning considerations discussed by the city. The concept envisions housing capacity for roughly 3,500 residents and represents one of several locations where larger-scale residential growth is being explored for the future.

City officials note that the proposal is still at a very early stage and is based on a spatial study that outlines possible development options rather than a binding construction plan. The site, covering around 19 hectares, is bordered by major roads and a stream, forming a clearly defined area suitable for coordinated urban development. Current plans suggest a mix of lower- and mid-rise residential buildings, complemented by public spaces and land reserved for basic services such as schools and childcare facilities.

At present, the area is largely undeveloped and used mainly for agricultural purposes, with only limited commercial buildings along nearby roads. Much of the land is privately owned, while the city holds a smaller portion. Any future construction would require substantial new infrastructure, including a main access road. Responsibility for building this connection and financing it has not yet been agreed, which remains one of the key obstacles to progress.

City representatives have acknowledged that discussions with potential investors have so far been complicated by differing views on transport links and cost-sharing. The municipality aims to set clear requirements to ensure that any future access routes meet appropriate technical and capacity standards and integrate with the wider road network.

The Dubina site is part of a broader planning framework that also includes two neighboring areas, known as Hůrka and Nová Hůrka. Together, these three locations could eventually provide housing for up to 15,000 people. Of these, the city has the greatest level of control over land in the Hůrka area, where preparatory work could begin later in the decade. External consultants are currently assessing how development there could be phased, including estimates of costs and recommendations on where the city might act directly as a developer, particularly for affordable or cooperative housing.

Overall, city officials emphasize that the plans reflect a long-term outlook rather than an imminent building program. Any realization of the new district would depend on further planning steps, agreement with landowners and investors, and the resolution of transport and infrastructure issues.

Source: CTK

Labour Force Survey data outline employment trends and updated methodology in Poland

Poland’s Labour Force Survey (LFS) data, published at the end of December 2025, provide a seasonally adjusted overview of labour market developments from the first quarter of 2010 through the third quarter of 2025. The figures are released on a quarterly basis and cover the population living in private households across the country.

The survey tracks the working-age population by distinguishing between people who are working, those seeking work, and those remaining outside the labour market. Individuals counted as working include people aged 15 to 89 who carried out paid or income-generating activity during the reference week, even if only for a limited number of hours. This group also includes those temporarily absent from work due to reasons such as illness, holidays, training, parental responsibilities or seasonal interruptions, provided their link to a job or business was maintained. Apprentices receiving remuneration are also included, while unpaid volunteers and subsistence farmers producing mainly for their own use are excluded.

Workers are further classified by their role in employment, separating employees, people running their own businesses, employers who hire staff, self-employed individuals without employees, and family members who assist in a business without formal pay. Those without work are counted as unemployed only if they were actively searching for a job and available to start work within a short period. The unemployed group is divided into categories reflecting whether a person recently lost a job, left work voluntarily, returned to job searching after a break, or is seeking work for the first time.

People who do not meet the criteria for either work or unemployment are treated as outside the labour force. This includes those who are not seeking employment, those whose job search is not active, or those who have found a job but cannot begin within the defined time frame.

Using these groupings, the survey calculates key indicators such as participation in the labour market, the share of the population in work, and the proportion of jobseekers among those who are economically active. To ensure comparability over time, the data are adjusted to remove regular seasonal fluctuations through a standard statistical procedure.

In recent years, methodological updates have been introduced to reflect changes in legal frameworks and data needs. Since 2021, definitions and questionnaires have been revised, including the formal introduction of an upper age limit for detailed labour market analysis and broader inclusion of certain unpaid family workers and people on parental leave. At the same time, some categories, such as self-employed individuals in small-scale private farming for own consumption, have been removed from the employed population.

Population weights used to produce national totals have also been updated. From late 2023 onward, the survey results have been aligned with demographic data derived from the 2021 population census, with historical figures revised accordingly to maintain consistency.

Together, the long time series and updated methodology offer a comprehensive picture of how employment, unemployment and labour market participation in Poland have evolved over the past fifteen years, while also highlighting the impact of definitional and statistical changes on labour market measurement.

They Are Not Hiring or Firing

The Labor Market Index (LMI), which signals future changes in unemployment, remained broadly stable in December, rising by just 0.1 points month on month. Despite this short-term stability, the index has increased by nearly five points over the past year, pointing to a gradual weakening of labor market conditions and a rise in registered unemployment. In November 2025, the registered unemployment rate reached 5.6%, up from 5% a year earlier. This increase reflected both weaker demand for labor and recent institutional changes affecting the operation of district labor offices and unemployment registration. While the impact of these regulatory changes is expected to fade in the coming months, subdued labor demand has persisted for more than three years, with no clear signs of reversal.

At present, movements in the index are driven mainly by two opposing factors. The sharp decline in the number of new job offers reported to labor offices is pushing unemployment upward, while a lower inflow of newly registered unemployed persons is exerting downward pressure. These indicators reflect the demand and supply sides of the labor market respectively. In November, the number of job offers registered at employment offices fell by more than 30% compared to October, and was over 60% lower than a year earlier. In absolute terms, the inflow of new vacancies has dropped to levels last seen in the early 2000s. At the same time, the Job Offer Barometer, which tracks online job advertisements, recorded its second consecutive and largest daily decline of the year in November. Taken together, these trends suggest that overall labor demand remains weak and that employers may increasingly rely on channels other than public job postings to reach candidates.

Meanwhile, the number of unemployed people leaving the register after taking up employment has remained broadly unchanged on a monthly basis. After adjusting for seasonal effects, this outflow exceeded 60,000 people for the first time in September and has since stayed at a similar level. Notably, whereas job vacancies previously outnumbered exits from unemployment into work, the situation has now reversed. With very few new vacancies being reported, the number of people finding jobs significantly exceeds the number of new offers registered with employment offices. This imbalance supports the view that both job seekers and employers are increasingly operating outside the public employment system.

Another factor contributing to expectations of a decline in registered unemployment is the low inflow of newly unemployed individuals. In November, the number of people registering as unemployed fell by more than 12% compared to the previous month and remains at historically low levels. This is notable given recent legislative changes that were intended to encourage economically inactive individuals and farmers to register.

Other components of the index have had a limited impact on overall movements. After several months of gradual increases, the number of unemployed persons laid off for reasons attributable to employers has declined for a second consecutive month. Nevertheless, business sentiment remains weak. Surveys of industrial enterprises continue to show negative assessments of the economic climate, and managers’ expectations regarding employment remain subdued, reinforcing the picture of a labor market marked by caution rather than active hiring or large-scale layoffs.

Source: BIEC

GCC Equity Markets Lag Global Rally in Volatile 2025

Global equity markets closed 2025 with one of their strongest performances in recent years, but Gulf Cooperation Council (GCC) markets once again underperformed global peers amid oil price weakness and heightened regional geopolitical risks, according to a report by Kamco Invest .

The MSCI World ACW Index rose 20.6% in 2025, marking its best annual performance in six years, supported by interest rate cuts, resilient economic growth, strong corporate earnings and a continued rally in artificial intelligence-related stocks. Emerging markets outperformed developed peers, with the MSCI Emerging Markets Index gaining 30.6%, while Asian equities posted their strongest year since 2017. Precious metals also recorded exceptional gains, with gold and silver reaching their highest annual increases since 1979. In contrast, crude oil prices fell sharply, declining 18.5% over the year and closing at USD 60.9 per barrel.

Against this global backdrop, GCC equity markets delivered modest returns. The aggregate MSCI GCC Index rose just 1.6% in 2025, following a 0.7% increase in the previous year. Kamco Invest attributed the subdued performance to a combination of regional geopolitical tensions, including conflicts in Gaza and instability in neighboring countries, as well as the sustained decline in oil prices. Despite these pressures, non-oil economic activity across the region remained resilient, supported by an estimated USD 4 trillion project pipeline and continued foreign investor participation.

Performance across individual GCC markets varied significantly. Oman emerged as the strongest performer in the region, with its benchmark index rising 28.2%, marking one of the best equity market performances globally in 2025. Kuwait followed with a gain of 21.0%, driven by a broad-based rally across large- and mid-cap stocks, while Dubai’s market advanced 17.2%, supported by strong trading activity and a buoyant real estate sector. Abu Dhabi, Qatar and Bahrain recorded mid- to low-single-digit gains over the year.

Saudi Arabia stood out as the weakest market in the region, with the Tadawul All Share Index falling 12.8%, its largest annual decline since 2015. The downturn reflected investor concerns over falling oil prices, regional geopolitical developments and weakness in large-capitalization stocks, particularly in the energy, materials and utilities sectors. Shares of Saudi Aramco declined 15% during the year, contributing significantly to the market’s overall performance.

Sector performance across the GCC was mixed. Telecommunications, banking and diversified financials were among the few sectors to record double-digit gains, helping to partially offset broader market weakness. In contrast, consumer durables, insurance and utilities posted steep declines, reflecting both sector-specific challenges and heavy exposure to the Saudi market.

Trading activity across GCC exchanges showed uneven trends. While some markets, such as Kuwait, Abu Dhabi and Dubai, recorded strong increases in volumes and values traded, activity declined sharply in Saudi Arabia amid weaker investor sentiment. At the regional level, foreign investors remained net buyers of GCC equities during the year.

Kamco Invest noted that while 2025 was marked by volatility and underperformance relative to global markets, key structural drivers in the GCC—such as economic diversification, infrastructure investment and steady non-oil growth—continued to provide underlying support. However, the report emphasized that oil price trends and regional stability remain critical factors shaping market performance going forward .

Urban Growth and the Case for Climate-Resilient Cities in India

fletcher@cijeurope.com
3 January 2026
CIJ - Spotlight, Environmental, Indicators, Land

India has crossed a threshold in its development journey. While a large share of the population still resides outside cities, economic activity is now overwhelmingly concentrated in urban areas. Cities generate most of the country’s output, attract the bulk of investment and serve as the primary engines of productivity. This shift has brought prosperity and opportunity, but it has also exposed deep structural weaknesses in how urban growth has been planned and managed.

The pace of urban expansion over the coming decades is expected to be transformative. India’s cities are set to absorb hundreds of millions of additional residents by the middle of the century, placing unprecedented pressure on land, water, transport systems and public services. As density increases, so does vulnerability—particularly to climate-related shocks that are becoming more frequent and intense.

Among the most visible consequences of this imbalance is urban flooding. What were once occasional disruptions have become recurring events across many cities, causing damage to homes, infrastructure and livelihoods year after year. The underlying causes are largely structural. Rapid construction has often taken place on natural drainage channels and low-lying land, while the spread of paved surfaces has reduced the ability of cities to absorb rainfall. Drainage systems designed for smaller populations and milder weather patterns are now routinely overwhelmed.

Changing climate conditions have compounded these weaknesses. Short bursts of intense rainfall are occurring more often, overwhelming urban systems that were never designed for such extremes. The human and economic costs are substantial, and they disproportionately affect low-income communities living in areas with inadequate housing and basic services.

In response, attention is gradually shifting toward approaches that work with natural systems rather than against them. Restoring water bodies, creating green spaces that absorb runoff and redesigning streets and public areas to allow water to percolate into the ground are increasingly seen as essential tools for reducing flood risk. In some cities, these ideas are already being tested through the revival of urban ponds, wetlands and parks that serve both environmental and social functions.

Climate resilience is not limited to flood management. Buildings play a central role in shaping urban sustainability. As cities grow denser and hotter, poorly designed structures intensify heat stress and drive up energy demand for cooling. Improving building design to reduce heat gain, enhance ventilation and lower electricity consumption has become a priority. Energy-efficient construction standards and high-performance design concepts are helping to demonstrate how cities can remain liveable while reducing their environmental footprint.

Waste and water management present another critical challenge. Rapid urbanisation has strained municipal systems, making it difficult to keep pace with rising volumes of waste and wastewater. In several cities, partnerships with private operators have helped improve collection, processing and long-term operation of treatment facilities. Where implemented effectively, these models have delivered cleaner neighbourhoods and more reliable services, showing how shared responsibility can strengthen urban resilience.

Transport is also undergoing a gradual transformation. Cities are exploring lower-carbon mobility options, including water-based transport in suitable locations, alongside expanded public transit systems. These investments aim not only to reduce emissions but also to provide redundancy and flexibility in the face of climate disruptions.

The need for climate-resilient infrastructure in India’s cities is no longer a distant concern—it is a present necessity. Urban growth will continue, but whether it amplifies risk or builds resilience depends on the choices made today. Integrating climate considerations into planning, construction and service delivery is essential if cities are to remain engines of growth rather than centres of recurring crisis.

India’s urban future will be defined not just by how fast its cities expand, but by how well they adapt. Resilient infrastructure, grounded in local conditions and supported by coordinated public and private action, offers the most credible path toward cities that are productive, inclusive and prepared for a changing climate.

Technology, Talent and the Changing Shape of Work in India

Artificial intelligence has moved rapidly from experimentation to everyday use across India’s technology and business services sectors. What was once viewed as a future capability is now embedded in software development, analytics, customer support and operational decision-making. This shift is creating new efficiencies, but it is also reshaping the country’s employment landscape at a time when India’s demographic advantage remains one of its most important economic assets.

The most immediate impact of advanced automation is being felt in routine digital work. Tools powered by machine intelligence are streamlining coding, testing and maintenance tasks that were once labour-intensive. While this has improved output and reduced turnaround times, it has also narrowed demand for entry-level and repetitive roles. For an economy that has relied heavily on technology services to absorb large numbers of skilled graduates, this transition presents both a challenge and an inflection point.

External pressures are adding to this adjustment. Changes in immigration policy in key overseas markets have increased the cost of deploying talent abroad, complicating traditional offshore-onsite delivery models. At the same time, proposals aimed at discouraging cross-border outsourcing are prompting global clients to rethink how and where work is performed. Together, these developments are forcing Indian service providers to adapt their operating structures and talent strategies.

In response, many international firms are adopting more selective sourcing models. High-sensitivity and product-critical roles are increasingly retained closer to end markets, while modular and process-driven work continues to be distributed globally. This has reduced volume-driven outsourcing but increased demand for specialised skills, architectural expertise and outcome-based delivery.

Against this backdrop, workforce transformation has become a priority. Large-scale reskilling efforts are underway, supported by collaboration between industry and government. Training initiatives now focus on areas such as data systems, cloud platforms, cybersecurity and applied artificial intelligence, enabling professionals to move up the value chain rather than compete with automation. Major technology employers have invested heavily in internal learning programmes, recognising that future competitiveness depends on continuously upgrading human capital.

Public policy has also sought to bridge the gap between education and employability. Internship and skilling platforms are being used to connect young workers with private enterprises, providing early exposure to real-world applications and easing the transition into formal employment. The emphasis is shifting from one-time qualification to lifelong learning, reflecting the pace at which digital skills now evolve.

At the same time, the geography of technology employment is changing. Companies are expanding beyond traditional metropolitan centres into smaller cities, attracted by lower operating costs, supportive local policies and an expanding talent pool. These locations offer a viable alternative to overcrowded hubs, allowing firms to scale while maintaining efficiency. Over time, this decentralisation is helping to spread economic opportunity more evenly across regions.

India’s technology workforce is therefore entering a period of recalibration rather than decline. Automation will inevitably replace some roles, but it is also creating new demand for problem-solving, system design and domain-specific expertise. The balance between displacement and opportunity will depend largely on how quickly skills evolve and how effectively institutions support that transition.

The intersection of technology and talent in India is no longer defined by scale alone. It is increasingly shaped by adaptability, continuous learning and the ability to align human capability with rapidly changing tools. In navigating this shift, India faces a defining test of whether its workforce can move in step with the technologies that now shape the global economy.

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