German business sentiment fell unexpectedly in December. According to the Ifo institute, the business climate index dropped from 88.0 in November to 87.6. Analysts had expected a slight increase.
Experts note that economic growth in Germany is slowing. Ifo director Klaus Vohlrabe said, “There are no presents for the German economy this year.” Government financial support has not had a significant impact so far.
Other economic indicators have also fallen. This shows that the long-awaited economic recovery has not yet begun. Part of the financial aid is used for aging-related costs, and infrastructure projects take time.
Ifo president Clemens Fuest said companies are pessimistic about the first half of 2026. The current situation has not changed, and the year ended without optimism. Chancellor Friedrich Merz promised reforms to revive the economy, but they have not yet been implemented.
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