German enterprise sentiment flat in February as economic system awaits new authorities

By Miranda Murray and Rachel Extra

BERLIN (Reuters) – Enterprise morale in Germany unexpectedly stagnated in February, a survey confirmed on Monday, dealing a tough hand to a future authorities after Sunday’s election wherein events promised to elevate Europe’s prime economic system from perpetual downturn.

The Ifo institute mentioned its enterprise local weather index remained flat at 85.2 in February after revising the January studying upwards barely to 85.2.

Analysts polled by Reuters had forecast an increase within the studying to 85.8.

Sunday’s election delivered a win to the conservative CDU/CSU opposition of Friedrich Merz, who has promised to chop pink tape, encourage funding and produce down vitality costs to spice up Germany’s shrinking economic system.

Ifo’s present circumstances index fell unexpectedly to 85.0 in February from 86.0 in January, whereas the expectations index rose to 85.4 from 84.3, in response to the Munich-based institute’s month-to-month survey of some 9,000 firms.

“The German economic system is in ready,” mentioned Ifo president Clemens Fuest, because the nation enters a section of government-building talks wherein a grand coalition seems the most definitely consequence.

Analysts have pointed to some indicators of stability on the horizon but additionally warned {that a} robust opposition made up of events on the far left and proper could complicate efforts for reform, for instance of the nation’s debt guidelines.

“The determine emphasises that the German economic system has hit all-time low and that growth-friendly reforms are urgently wanted,” mentioned Jens-Oliver Niklasch, senior economist on the LBBW financial institution, including nonetheless that sluggish international commerce was not an issue simply solved domestically.

“An actual enchancment within the economic system can solely be anticipated within the second half of the yr at greatest. For the present yr, we proceed to anticipate a renewed contraction in financial output,” Niklasch added.

(Reporting by Miranda Murray and Rachel Extra; Enhancing by Hugh Lawson)