Business confidence in Germany picks up after year of decline

Chris Papadopoullos
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German Chancellor Angela Merkel is resisting calls to run a budget deficit to boost growth
Business confidence in Germany has suddenly halted its sharp decline,a set of new data shows.

The Ifo business climate index published yesterday by the Centre for Economic studies at Munich University rose to 104.7 in Nov­ember from 103.2 in October, ending six months of decline.

The score is such that 2005’s level is marked as being 100, so levels of sentiment are now marginally higher than in 2005. The rise reflected an improved assessment of the current economic situation and better expectations for the Germany economy.

At the beginning of the year, the business climate index was 110 and has been falling since.

“It is far from certain that any rise in business confidence will have any material impact at least in the short term in lifting investment plans and supporting employment,” said economist Howard Archer of market analyst firm IHS.

“It will highly likely need sus­tained improvement in business confidence for this to happen.”

A turnaround in German fortunes would be welcomed by Chancellor Angela Merkel, who has so far refused to bow to pressure to provide the economy with fiscal stimulus. Instead, Merkel has insisted on balancing the books.

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