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German IFO shows slight Brexit effect

Monday, July 25, 2016 - 01:27

Germany's key IFO index shows business morale fell in July, suggesting company executives in Europe's largest economy have become less optimistic since Britain voted to leave the European Union. David Pollard reports.

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It's another sign that Europe's economy has been shaken by Britain's Brexit vote. Germany's key IFO reading takes soundings from 7,000 firms. This month's business climate index slipped to 108.3. And the organisation's economist says Brexit could shave 0.1 per cent off German GDP this year. Though the reading is in fact not as bad as expected. (SOUNDBITE) (English): DARREN SINDEN, INDEPENDENT MARKET ANALYST, SAYING: "It's very early days. We're a month after the poll. We haven't enabled Article 50 - that probably won't happen now until the end of the year at the earliest. And as you know, some people are saying that the whole process could take up to six years to complete. At the moment, too early to say, but people are having a good hard think about what Brexit might mean to them and to their businesses." Share markets were taking heart at pledges made at the weekend's G20 meeting. Stocks holding close to nine-month highs. Ministers talked of a determination to use all policy tools - including fiscal stimulus - to boost growth. Though right now, many are looking for more monetary easing from Japan - that's expected this Friday. Japan, though, ruling out some more extreme measures that have been suggested. (SOUNDBITE) (Japanese) GOVERNOR OF BANK OF JAPAN, HARUHIKO KURODA, SAYING: "At this G20 meeting we did not discuss things such as helicopter money, the words 'helicopter money' were not even uttered at all." The G20 also discussed other risks including terrorism - the IFO adding that a series of four attacks in Germany in the last week could also take their toll on economic sentiment.

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German IFO shows slight Brexit effect

Monday, July 25, 2016 - 01:27