Dusseldorf Ifo boss Clemens Fuest sees Germany “on the threshold of recession”. The reason for his warning is the publication of the Ifo business climate index, which was worse in July than it has been for around two years.
The important economic indicator slipped to 88.6 points – the lowest level since June 2020. In the previous month the index was still at 92.2 points. “We have a very strong pessimism across all areas of the economy about the next six months,” says Fuest in the new episode of Handelsblatt Today.
Above all, the high energy costs and the uncertainty with regard to the energy supply are fueling fears of a recession among the managers surveyed.
Against this background, Fuest advocates allowing the three nuclear power plants in Germany that are still active to continue operating beyond the end of the year. “It would be completely crazy, with these astronomical electricity prices, to drive prices up further by shutting down the nuclear power plants,” says Fuest in an interview with host Anis Micijevic.
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Fuest is largely critical of the ECB’s monetary policy: On the one hand, the Ifo President welcomes the interest rate hike of 0.5 percentage points as a clear signal in the fight against inflation. On the other hand, in his view, the ECB should have ended its bond purchase program much earlier.
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