Business

German business confidence in steepest drop since 2008

German steel worker Image copyright Reuters

German business confidence suffered its steepest drop since 2008, according to a widely watched survey by Ifo institute.

The fall, the third in a row, left the Ifo business climate index at 105.7 from 107.3 in January. Economists had forecast a slip to 106.8.

The fall is being blamed on a drop in demand for German goods in emerging markets.

It leaves business morale at its lowest level in more than a year.

The survey, which is based on monthly responses from around 7,000 firms in Germany, suggests that companies are concerned about the economic outlook for the next six months.

Europe's largest economy has suffered from a drop in demand from emerging markets in Asia and Latin America,

Carsten Brzeski of ING Bank said the numbers were a "wake up call". He added that "global events have finally reached German companies' boardrooms".

German companies have been relying on a strong US economy to offset the falling exports to China, Brazil and other emerging markets.

Ifo President Hans-Werne Sinn said the outlook for the German economy was worrying.

"The majority of companies were pessimistic about their business outlook for the first time in over six months."

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