Business confidence in Germany has fallen to its lowest level since early 2020 amid growing fears that record inflation and restricting energy supplies from Russia will plunge Europe’s biggest economy into recession, Bloomberg reports
Business confidence in Germany has fallen to its worst level since the early months of the pandemic amid growing fears that record inflation and constrained energy supplies from Russia will push Europe’s biggest economy into recession.
The expectations index released on Monday by the Ifo institute in Munich fell to 80.3 in July from 85.8 in June.
“Germany is on the verge of recession,” said Ifo president Clemens Füst, “High energy prices and the threat of gas shortages are weighing on the economy. Companies expect a significant deterioration in business activity in the coming months.”
The Bundesbank warned last week that price rises are likely to remain elevated in the coming months and may even intensify in September when the temporary bailout ends. Concerns over Russian gas supplies are “dampening the outlook” for German economic growth, the bank said in its monthly report.
The main risk for Germany, which imports a large part of its natural gas from Russia, is that a further slowdown or disruption of energy supplies would further boost inflation.
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