Ifo survey: German companies’ confidence is dwindling

Sentiment among German businesses deteriorated appreciably across the board at the beginning of the year. In January, the ifo business climate index fell lower than at any point in almost three years. Particularly hard hit are corporations’ business expectations, which have truly slumped. Managers were last similarly sceptical of the future prospects back in 2012.

Corporate Germany is evidently gradually losing confidence in a solution in the foreseeable future to the political problems that are increasingly placing a drag on the economy. It is once again industry that is worst off, as it is to an ever greater extent suffering the consequences of the trade dispute between the USA and China. The risk of a hard Brexit has likewise become far more threatening of late. The signs of a downturn are also growing in sectors that rely more heavily on the domestic economy.

In the wake of these disappointing figures, an incisive economic recovery in the first quarter such as many forecasts assumed is becoming increasingly unlikely. There is the danger of the growth dampener caused last autumn by one-time factors such as the new exhaust emission standards for the car industry extending well into 2019. What would be crucial now would be positive signals from the politicians: What is called for are constructive proposals for solutions rather than an insistence on simply blocking one another.

 

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