Business

German business confidence rises in June

Seabstian Vettel after winning the Canadian Grand Prix
Image caption As Germany's Sebastian Vettel wins another Grand Prix, his country's economy may also be on the up

Germany's Ifo index of business sentiment rose slightly in June, raising hopes that the eurozone's largest economy is returning to stronger growth.

The index rose to 105.9, up from 105.7 the month before.

Germany's economy shrank by 0.7% in the final quarter of 2012, and grew just 0.1% in the first quarter of 2013.

But the Organisation for Economic Co-operation and Development is forecasting 0.4% growth for the year.

Germany's Ifo think tank calculates its headline index by taking into account companies' current view of the business climate and their outlook for the next six months.

Signs of increasing confidence reduce fears that the German economy may slip back into negative territory.

Ifo economist Kai Carstensen said: "Although assessments of the current business situation are slightly less positive, firms are increasingly optimistic with regard to their future business outlook."

Europe's powerhouse economy is primarily export led, so lack of demand from its recession-hit European trading partners has slowed growth.

The eurozone as a whole - comprising the 17 European countries which adopted the euro currency - contracted in the first quarter of 2013, its sixth consecutive quarterly fall.

Countries like Greece, Portugal, Spain and Italy continue to act as a drag on growth, as they struggle to reduce their debt mountains through austerity measures, public sector reforms and bank restructuring.