Business confidence in Europe's biggest economy, Germany, has fallen unexpectedly after the UK Brexit vote, according to a closely watched survey. The Ifo business confidence index, based on about 7,000 company responses, fell to 106.2 points for August from 108.3 in July. It was the steepest monthly fall in more than four years and took the index to its lowest since December 2014.
Despite the gloom, the euro was up slightly against the pound and dollar The latest drop follows a much smaller decline in confidence in July immediately after the UK voted to leave the EU. Economist Carsten Brzeski at ING-DiBa said the ongoing decline "suggests that German businesses have suddenly woken up to Brexit reality". "It is not the first time that the Ifo reacts with a delay of one or two months to global events,'' he said, adding that at present, the German economy remained in a "virtuous circle". Across the sectors it examines, the Ifo found confidence had fallen in all but construction and services. "The German economy has fallen into a summer slump," Ifo president Clemens Fuest said. Other official figures released earlier this month showed the German economy grew 0.4% in the second quarter compared with the previous three-month period. That was a slower pace than the 0.7% growth in the first quarter, but double what economists had expected.