German business confidence soars to highest in 14 years

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German business confidence soars to highest in 14 years

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Business confidence in Germany unexpectedly rose to its highest level in more than 14 years this month.

The Ifo confidence index, based on a regular survey of 7,000 companies, went up for the third straight month. It now stands at 103.3, the highest level since October 1991. Ifo said that was continuing a trend that started to emerge last summer.

There was optimism across all areas – manufacturers, wholesalers, construction and even the struggling retail sector.

And Ifo made the point that domestic demand appears to be gaining momentum.

German growth has been highly dependent on exports for years, with consumers reluctant to spend money and many firms concentrating their investment abroad.

The figures are encouraging for Chancellor Angela Merkel.

Her government’s forecast for this year was for growth of 1.5%, but economists now says that looks cautious.

However, an attempt to make Germany more productive by introducing longer working hours for public sector employees has sparked a strike which has rubbish piling up in the streets and the union threatening more stoppages.