German Consumers Rein-In Spending After Tax Rise

28 February 2007

NUREMBERG: Consumer confidence in Germany has ebbed despite an upswing in Europe's largest economy. Figures from market researcher GfK's consumer sentiment index for March show a slide to 4.4 points from a revised reading of 4.9 in February and well below 8.7 in January.

The fall has been blamed on the hike in value-added tax, introduced by the federal government at the beginning of the year. It was raised from 16% to 19% to keep the budget deficit in check.

GfK says consumers are reluctant to make major purchases at the moment, but it is optimistic that the index will stabilise in the second quarter.

The widely watched Ifo Institute's survey of German business confidence also slipped in February, the second month in a row. It declined to 107 from 107.9 in January. Economists had expected a lesser drop. Ifo dismissed fears that the nation's economy is on the verge of a slowdown.

  • Meantime, India's economy continues to boom, according to AC Nielsen. Six-monthly results from its 46-country Consumer Confidence Index show India led the chart for the fourth half-year in a row and scored an all-time-high of 137, with Norway in second place and Denmark in third.

    Indians are bullish about the job market, with 95% rating it excellent or good, while 87% are optimistic about their personal finances in the next year.

    Data sourced from; additional content by WARC staff