Business confidence among German companies dwindles, survey shows

[BERLIN] Business confidence among German companies is declining with only one in three firms now expecting production to increase next year and one in four anticipating a rise in exports, a survey showed on Monday.

The Cologne Institute for Economic Research (IW) said in its bi-annual business survey that the weakening eurozone economy and the ongoing conflict with Russia over Ukraine were having an increasingly negative impact on German companies.

From the nearly 3,000 firms polled this autumn, 31 per cent expected production to rise in 2015 compared to 53 per cent in spring, while only 24 per cent anticipated exports to increase compared to 34 per cent half a year ago, the institute said.

Economic uncertainty is weighing on investments plans, with only 30 per cent of firms polled intending to spend more and 23 per cent likely to invest less, the survey showed.

On the employment side, 24 per cent expect to hire more people compared to 38 per cent in the spring survey, it added.

IW said policies adopted by conservative Chancellor Angela Merkel's coalition with the Social Democrats, such as lowering the retirement age and introducing a legal minimum wage, had been "at the expense of companies".

German business sentiment has fallen for six months running, according to the Munich-based Ifo institute, hitting its lowest level in almost two years, and hard data has painted a similarly bleak picture.

A slew of organisations including the OECD, the IMF and leading institutes have slashed their forecasts for German economic growth and the government now expects the economy to expand by just 1.2 per cent this year and 1.3 in 2015.

REUTERS