German and French economies enter summer slump

Jake Cordell
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French firms and German businesses were taking it easy over the summer
French firms and German businesses were taking it easy over the summer (Source: Getty)

The powerhouses of the Eurozone could be languishing in a summer slump, figures out today have hinted.

Measures of business confidence in both Germany and France missed expectations this morning, denting prospects for either economy to bounce back from a growth slowdown in the run-up to the UK's EU referendum.

The closely-watched Ifo survey of Germany employers showed a "clear worsening" of the business climate, number crunchers said, while confidence among French manufacturers also slipped. The Ifo score came in at 106.2 in August, down from 108.3, as Clemes Fuest, president of the Ifo Institute said: "The Germany economy has fallen into a summer slump".

Read more: German investors aren't worried about Brexit - yet

In France, the second largest economy in the Eurozone, the National Institute of Statistics and Economic Studies (Insee) found confidence among French firms fell by one point, from 102 to 101 in August, while the dip in outlook among manufactures was a little sharper.

Although only slight, the fall comes off the back of disappointing GDP figures which showed France failed to grow at all in the second quarter, despite hosting the Euro 2016 championships in the month of June.

Timo Klein, the principal economist at IHS Global said the figures "appear to be a delayed negative reaction to the UK referendum."

Firms across the Eurozone, particularly in Germany, had previously shown little sign that the EU referendum would dent their outlook for the year ahead. Moreover, the European Central Bank (ECB) concluded at the end of July the negative impact of the UK's vote for Brexit had been significantly less marked than it had expected.

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