German business morale has deteriorated for a fifth month in a row as government borrowing costs hit a 12-year high.
In another bleak update for Europe’s largest economy, the Munich-based Ifo Institute thinktank said its index of confidence among German companies fell again this month.
‘The German economy is treading water,’ said Ifo president Clemens Fuest.
The report came as the yield on ten-year German bunds – a key measure of the cost of borrowing – hit its highest level since 2011. Germany has been dubbed ‘the sick man of Europe’ as years of economic success give way to stagnation and decline.
It is forecast to be the only G7 economy to contract this year.
Troubled times: The Munich-based Ifo Institute thinktank said its index of confidence among German companies fell again this month
The German economy is at risk of sliding into its second recession in a year. Output fell in the last quarter of 2022 and the first quarter of 2023.
It then stagnated in the second quarter of the year – meaning the first recession was over – but is expected to shrink again across the third and fourth quarters. A double-dip recession in Germany would be a blow to the wider eurozone as it splutters in the wake of the Covid-19 pandemic and invasion of Ukraine.
ING Research’s Carsten Brzeski said: ‘German businesses, as well as politicians and the entire economy, are gradually getting used to the idea that the economy is in for a longer period of subdued growth.’
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