High hopes for firms in face of German ballot

BUSINESS confidence in Germany remains buoyant, according to June’s Ifo index, which shows continuing strong sentiment on the current business climate and a positive outlook for the future.

The index’s reading stands at 109.4 as of yesterday, with any result over 100 signifying a positive reaction.

German Chancellor Angela Merkel’s CDU party also announced their manifesto positions for the upcoming national election yesterday.

The party wants other European countries to place more of an emphasis on reforms to labour markets, and institute sanctions for countries which run large budget deficits.

The governing party also confirmed their opposition to eurobonds and Eurozone-wide deposit guarantees.

German politicians have been hesitant to sign up to EU agreements, which would leave their taxpayers exposed to bank failures and elevated government borrowing on the European periphery.

Opposition to such schemes does not come as a surprise from Merkel’s party, but with a commanding lead in polls, it looks increasingly likely that the chancellorship will not change hands after September’s elections.

German businesses also registered more positive outlooks than expected for the next six months, with the Ifo’s expectations indicator rising from 101.6 in May to 102.5 this month.

Jonathan Loynes, chief European economist at Capital Economics, commented: “While the Germany’s economy does appear to have some upward momentum, it is unlikely to be strong enough to drive the Eurozone as a whole out of recession”.

Unlike many European countries, Germany has had strong confidence over recent years, with companies recording a positive climate for business since early 2010.