Financial Debt Crisis Pressures German Economy

German businesses are not eyeing many reasons to be optimistic, as they have been faced with the ongoing debt crisis that is crippling most of Europe. The Munich-based IFO Institute said on Monday that September was the fifth straight month that the Business Climate Index fell. The Index has now reached its lowest point in 19 months.

A slight recovery in the manufacturing sector in Germany was experienced during August, but in September, it cooled again significantly. Most businesses are less satisfied with their position today and expressed a great deal of pessimism for the near future.

The largest economy in all of the 17-nation eurozone is Germany’s and exports are what drive it. However, the demand for German goods has dropped due to the debt crisis that has extended and weighs on every other member nation across the region.

The results from the Index show that businesses are really concerned with the outlook and slowdown for the exports in the country because of the trend that started to take hold again in August.

Even though there was much negativity in the report, there was also good news, including reports received from wholesalers and retailers that showed business had improved in each area.

The eurozone jumped a big hurdle earlier in September when a high court in Germany permitted the creation of the bailout fund. Opposition leaders had filed a lawsuit against the creation of the ESM however; the court struck down the suit and allowed the fund to move forward.

When fully funded, the fund will have over $650 billion. The monies will be received from the different member governments over time. The capital will be used to give loans to eurozone members who encounter financial difficulties.

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