German business confidence plummets in July to its lowest level in two years, according to Ifo

MADRID, 25 Jul. (EUROPA PRESS) -

The confidence of German businessmen has fallen considerably in July, as reflected in the index prepared by the Munich Institute for Economic Research (Ifo), which has stood at 88.6 points from 92.2 points last month, reaching its lowest value since June 2020, as Germany "is on the verge of a recession".

Ifo president Clemens Fuest has pointed out that companies expect business to become "much more difficult" in the coming months and are less satisfied with their current situation. "Higher energy prices and the threat of a gas shortage are weighing on the economy. Germany is on the brink of a recession," Fuest warned.

The Ifo index tumbled in the manufacturing industry and pessimism regarding the coming months reached its highest level since April 2020. Companies evaluated their current situation as "worse".

In the services sector, the business climate also worsened substantially, and the plunge was particularly pronounced in business expectations. Service providers evaluated their current business as worse, but the indicator remains at a "high" level.

In trading, the indicator plummeted again and no retail segment is optimistic about the future. After a brief recovery in the previous month, the business climate in construction deteriorated markedly again and assessments of the current situation fell to their lowest level since April 2016, with expectations marked by "deep pessimism".