Trade fears weigh on German business confidence

German businesses have been affected by an escalating tit-for-tat trade war between the European Union and the United States. (AFP pic)

FRANKFURT: Confidence among German business leaders fell slightly in July, a closely-watched survey showed on Wednesday, as trade war fears weighed on the outlook for the future.

The Munich-based Ifo institute’s monthly barometer, based on a survey of 9,000 businesses, shed 0.1 points for a reading of 101.7 this month.

“Companies were slightly more satisfied with their current business situation, but scaled back their business expectations slightly,” Ifo president Clemens Fuest noted in a statement.

Levels of German business and investor confidence have fallen in recent months, as companies weathered a growth slowdown in the first quarter and eyed an escalating tit-for-tat trade war between the European Union and the United States.

Early indicators suggest growth may have recovered slightly between April and June.

But trade war fears remain live, as European Commission President Jean-Claude Juncker travels to Washington for last-ditch talks with US President Donald Trump.

Juncker said on Wednesday he was “not very optimistic” that he could talk the US leader out of border taxes on car imports from the EU.

After Trump first hit steel and aluminium with tariffs, the EU reacted with levies of its own on a selection of American goods such as motorcycles, jeans, and peanut butter.

“Chances for a return to powerful growth in the second half of the year look good, even if there are two weighty risks with the trade dispute between the US and the rest of the world as well as Brexit,” economists at public bank LBBW commented on the Ifo result.