German Business Sentiment Tumbles in December

German Business Sentiment Declines Sharply in December

By Rachel More

BERLIN (Reuters) -German business morale worsened more than expected in December, a survey showed on Tuesday, weighed down by companies' pessimistic assessment of the coming months amid geopolitical uncertainty and an industrial slump in Europe's largest economy.

The Ifo institute said its business climate index decreased to 84.7 in December from a revised 85.6 the previous month.

Analysts polled by Reuters had forecast a reading of 85.6.

The survey of around 9,000 company managers found an improvement in the assessment of current conditions, but the expectations index posted a surprise fall to 84.4 in December from 87.0 in November. Economists polled by Reuters had forecast a reading of 87.5.

The re-election of Donald Trump as U.S. president, paired with a political impasse at home ahead of snap polls in February, has added to uncertainty at a time when Germany is already battling stubborn headwinds.

Already on track for a second consecutive year of contraction in 2024, next year is forecast to bring further challenges as the German industrial model stalls, with big names like Volkswagen looking to scale back production, and consumer sentiment tumbling on feared job cuts.

(Reporting by Rachel More, editing by Friederike Heine)