German business confidence falls

German business confidence has taken a further dive and is now at a new fifteen-year low, according to the key Ifo economic climate index.

The Ifo index is based on a poll of 7,000 companies, and has fallen by 4.4 points from the previous month and now stands at 85.8 having fallen for 6 consecutive months.

The fall in German exports, as a result of the global economic downturn, has hit the labour market hard in recent weeks, even though some of the nation’s car manufacturers have tried to weather out the storm and maintain the levels of production.

The Markit purchasing managers’ index has shown that business activity in the 15-nation euro zone is at a ten-year low, and with new orders still continuing to fall at an alarming rate, purchasing activity is similarly at a record low.

It is hoped that the European Central Bank will cut interest rates by a minimum of 75 basis points if not more, as purchase orders and demand weaken, said an Ifo economist.

So far companies, such as BASF SE and Bayerischer Motorenwerke AG have had to cut back production levels in order to remain profitable in these difficult times.

The International Monetary Fund predicts that the world’s major economies will shrink to their levels of around World War II, with Germany forecast to shrink by 0.8 percent.

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