German business confidence up

The much-quoted Munich-based Ifo institute in its monthly poll embracing a representative cross-section of companies, recorded an index of 96.0 for September, the highest figure since January 2005.

In August the index had dropped to 94.5. Ifo's chief economist, Klaus Abberger, sees the survey as an indication that Germany is on the brink of recovery, which would be reflected by good results in the third and fourth quarters of 2005.

Analysing business trends after the elections, the employer-orientated Institut der deutschen Wirtschaft (IW), Cologne, has come to the deduced that a grand coalition of the conservative CDU/CSU parties and the social democrat SPD, which has now become very likely, will not hamper the economic revival.

It expects a growth of 1.5 per cent in the new government's term of office. The outgoing 'red / green' coalition headed by Chancellor Schroeder had presided over an almost stagnant economy with annual growth rates of meagre 0.5 per cent between 2001 and 2005. IW also forecast the creation of half a million new jobs by 2009.

Some observers regard the rising business confidence as proof of the declining influence of politics on the economy. Ulrich Kater, chief analyst of Dekabank, noted: 'It appears that the economy gets used to the caprioles of German politics and refuses to pay much attention to it.'