BERLIN (Reuters) -German business morale improved for a third straight month in November, the Ifo institute said on Friday after its latest survey, adding there had been no impact “for the time being” from a court ruling that has torn a hole in government finances.
The institute said its business climate index stood at 87.3, slightly below the 87.5 forecast by analysts in a Reuters poll.
Germany’s constitutional court ruled last week the government’s decision to re-allocate 60 billion euros ($65 billion) of unused debt from the pandemic era to its climate and transformation fund was unconstitutional, blowing a hole in the federal budget.
Germany’s steel sector on Thursday voiced concerns shared by many firms about what will happen to funds promised to help the industrial transformation.
Ifo’s head of surveys, Klaus Wohlrabe, told Reuters the court ruling had had no visible effect on its survey “for the time being”, with a quarter of the responses coming after it.
Companies were somewhat more satisfied in November than in the previous month with their current business situation, with the sub-index rising to 89.4 from 89.2 in October.
The expectations sub-index also improved to 85.2 from an upwardly revised 84.8 the month before.
“The question that naturally arises is whether the rise in the Ifo business climate index is merely a flash in the pan or marks a turn for the better? We don’t really want to believe it,” said VP Bank Chief Economist Thomas Gitzel.
Potential austerity measures resulting from the court decision “are not exactly contributing to greater confidence in future economic development,” added Gitzel.
An economy ministry source told Reuters last week that the court ruling could cause growth in 2024 to be about half a percentage point lower.
The ministry last month predicted the economy would shrink by 0.4% this year and grow by 1.3% next year.
The federal statistics office earlier on Friday confirmed the economy shrank 0.1% in the third quarter.
(Reporting by Miranda Murray and Rene Wagner, Editing by Linda Pasquini and Mark Potter)
