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German business morale at two-year high

Monday, September 26, 2016 - 01:47

German business morale rose more than expected in September, a survey shows, suggesting company executives in Europe's largest economy have become more optimistic after their morale plunged last month over concerns about Brexit. Sonia Legg reports.

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A golden autumn - that's the way Germany's influential IFO institute sees the season ahead. Despite a cooler summer - German business morale in September was at its hottest for two years. (SOUNDBITE) (German) IFO ECONOMIST, KLAUS WOHLRABE, SAYING: "The shock of Brexit was only short-lived. It influenced the German economy because it increased uncertainty. But nothing formal has been decided yet and we see the indicators from the UK are very optimistic. Companies here have seen that and they're not so worried." The mood has been helped by the construction sector. It's beating record after record and can barely keep up with orders. (SOUNDBITE) (English) CHIEF ECONOMIST AT PANMURE GORDON, SIMON FRENCH, SAYING: "Economic conditions are very, very favourable for Germany. It is tied into a monetary union with the rest of the euro zone which is wholly inappropriate for the southern states which see the euro as too high. The other side of that is that the euro is probably too weak for the German economy but that's not a bad problem to have because with export-led businesses a weak currency can be a big advantage." The ECB's massive stimulus programme is also a key factor. It means consumers have more money to spend. (SOUNDBITE) (English) CHIEF ECONOMIST AT PANMURE GORDON, SIMON FRENCH, SAYING: "You go back to the medium and long term prospects from productivity growth, the skilled labour, low unemployment rate that is a powerful cocktail to ensure the long term economic prosperity of Germany." Even so Germany apparently has no plans to help its biggest lender. Deutsche Bank is facing a $14 billion bill from the U.S. to settle claims it missold mortgage backed securities. The German Chancellor has reportedly told the bank it can solve its own problems, sending shares to a record low.

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German business morale at two-year high

Monday, September 26, 2016 - 01:47