Business confidence in Germany darkened this month as the government of Chancellor Olaf Scholz fell apart and the country’s manufacturers struggle to get back on their feet, raising fears of recession in Europe’s most important economy, Report informs via The Wall Street Journal.
The Ifo Institute’s business-climate index, released Tuesday, slipped to 84.7 in December from 85.6 in November, marking a sixth fall in seven months and the lowest point since May 2020, when Europe was in the throes of the global Covid-19 pandemic and widespread lockdowns.
Economists had been expecting a lesser fall, to 85.5, according to a poll compiled by The Wall Street Journal. In contrast, a sentiment indicator released by ZEW showed an improvement in the economic outlook as financial markets look forward to a new government in Berlin and further cuts to eurozone interest rates, ZEW said Tuesday.
The Ifo Business Climate is based on approximately 9,000 monthly responses from businesses in manufacturing, the service sector, trade, and construction. Companies are asked to give their assessments of the current business situation and their expectations for the next six months.