Businesses in Germany, Europe’s largest economy, are losing their confidence, according to the influential Ifo business climate index. The news follows yesterday’s revelation of an 8.8% February fall in the nation’s advertising expenditure [WAMN: 21-Mar-01].

The Ifo index for last month fell to 94.9 compared to 97.5 in January - further than expected and its lowest level since July 1999. Commented economist Rainer Guntermann of Dresdner Kleinwort Wasserstein: “The data clearly suggests that there is potential for a sharp slowdown in Germany around the corner.”

"It's very poor. It raises the chance of seeing a 50 basis point interest-rate cut from the ECB rather than 25 (basis points) when they eventually start moving," said another entrail-raker.

The Ifo index is based on a survey of 7,000 companies. Its data often highlights trends that could later extend throughout the German economy –a significant indicator for the euro currency area as a whole.

News source: BBC Online Business News (UK)