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German firms hit 2.5-year confidence high

German business confidence hit the highest level for more than two and a half years in February, as the outlook for Europe's biggest economy continues to hold up, data showed on Monday.

German firms hit 2.5-year confidence high
Photo: DPA
The Ifo economic institute's closely watched business climate index climbed to 111.3 points this month, the highest level since July 2011. In January, the index had stood at 110.6 points.
 
"The German economy is holding its own in a changeable global climate," Ifo chief Hans-Werner Sinn said in a statement.
 
Ifo calculates its headline index on the basis of companies' assessments of their current business and the outlook for the next six months.
 
It rose to 114.4 points in February from 112.4 points in January.
 
"German businesses remain diehard optimists," said ING DiBa economist Carsten Brzeski.
  
Gross domestic product data for the fourth quarter came in better than expected and further positive hard data are set to follow, Brzeski said.
   
"Of course, there are also risks," the expert noted, pointing to an unexpected slowdown, further emerging market turmoil and a Chinese hard landing.
   
But such concerns should disappear quickly, Brzeski believed.
   
Nataxis economist Johannes Gareis, too, felt that "all in all the German business climate remains more than upbeat, suggesting that Germany's business sector is on a growth course heading into 2014."
   
But Capital Economics economist Jonathan Loynes was more cautious.
   
"The survey has been consistently over-optimistic relative to the hard data over the last year or so, so its implications for growth should not be interpreted too literally," he said.
   
"Overall, the Ifo survey supports the broader evidence suggesting that the German economy is expanding at a steady but unspectacular pace," Loynes argued.
   
Berenberg Bank economist Christian Schulz said that despite its apparent strength, the German economy "is not completely immune to the emerging market turbulences."
   
But "fortunately, Germany can rely on domestic demand as the key driver of growth at the current stage of the cycle. Private investment is rebounding after a long period of decline. And the Ifo index reassuringly points to strength in another key component of domestic demand, namely consumption," he said.
 

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TRADE

‘Exports have steadily sunk’: Brexit sends Britain sliding down German trade rankings

Britain is slipping down the list of Germany's most important trade partners, official data showed Monday, after its 2016 vote to quit the EU marked an end to growth in exchanges.

'Exports have steadily sunk': Brexit sends Britain sliding down German trade rankings
A Eurotunnel employee checks a truck with a British flag sticker. Photo: DPA

Between January and July, Britain was only Germany's seventh-most important partner with combined imports and exports of almost €68.5 billion, federal statistics authority Destatis said.

Exports to Britain fell back 4.6 percent compared with a year earlier, to 47.1 billion, while imports shed 3.7 percent, to 21.3 billion. In 2015, Britain was fifth in the ranking.

Ahead of the island nation were China, the Netherlands, the US, France Italy and Poland, while Britain outstripped Austria, Switzerland and the Czech Republic among the top 10.

“Before the referendum, German exports to Britain rose continually from 2010 to 2015,” the statisticians noted.

“Since the referendum in 2016, exports have steadily sunk.”

For all The Local Germany's Brexit coverage CLICK HERE

The picture is different in imports, with Germany buying slightly more from Britain since the Brexit referendum.

But the gap between the two figures remains wide.

In the year to July, Britain bought €25.8 billion more of German goods than it sold in the opposite direction.

Auto industry woes made a strong contribution to weaker business between Germany and Britain, with cars and parts accounting for just below 25 percent of trade volume.

German auto exports to Britain fell 9.7 percent in January to July, while imports fell 9.1 percent.

READ ALSO: Brits face residence permit costs of up to €150 in no-deal Brexit

'Massive tariffs overnight'

As The Local reported in July, European trade association Business Europe warned against a no-deal Brexit. The consequence of a no-deal would be “massive tariffs overnight”, said the General Director of Business Europe, Markus Beyrer, to Funke Media Group newspapers.

Even if Boris Johnson claims the opposite, he is mistaken, Beyrer said, adding: “Yes, there will be customs duties.”

Beyrer said without a withdrawal agreement, the UK would move from fully integrated EU country status to absolute non-status. “There is hardly a country in the world, perhaps apart from North Korea, that would have an even worse level of agreements with the EU,” he said at the time.

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