(eToro Blog) With Germany acting as the main driver of the Eurozone’s economy, news this morning that business sentiment continues to decline surely won’t come as a surprise to anyone. The IFO Business Climate report for German industry and trade shows that sentiment declined again in October, with many of the 7,000 respondents more skeptical now that the next six months will hold little promise of growth though quite a few reported that they were making provision for expansion.
According to the October reading, the current assessment fell from September’s 117.9 reading to 116.7 reading, slightly better than the consensus estimate of 116.5. Likewise, the business climate reading fell to 106.4 from an upwardly revised 107.5, but beat the consensus forecast of 106.3. Expectations, too, declined to 97 from 98 but were in line with forecasts; still, the number is well off the expectations’ peak of 110.7 struck in February of this year. The president of the IFO Institute said that, in his opinion, the German economy is performing rather well, all things considered.
The data likely won’t take markets by too much surprise given the ongoing debates over the Eurozone’s various fiscal problems and the role that Germany may be required to play in solving them. In recent days, German and French policymakers have been at odds over several issues, all of which could ultimately result in German taxpayers paying a hefty price for its country’s membership in the European Union.
Market participants, who are anxiously awaiting some news of resolution, will have to remain patient as the debt discussions will continue beyond this weekend’s E.U. summit. The leaders of France and Germany announced that they would need additional time to sort through their differences; as a result a second meeting is planned next mid-week.
One German insider said, however, that the delay would also give Angela Merkel the opportunity to address growing criticisms from members of the German parliament who believe that the Chancellor is making decisions beyond her capacity and which would affect German taxpayers.
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