Fuest said while an introduction of new emissions standards for Germany’s auto sector was an important factor in the economic deceleration, there was also evidence of a wider structural slowdown across all sectors.
“It is broader, and this reflects that the world economy is cooling down. There are some risk factors such as the situation in Italy and Brexit,” he added.
The economist said the ifo’s sub-measurement of uncertainty among business had risen at its fastest level in 10 years, reflecting current concerns over geopolitics.
Fuest said he expected most German companies would sit tight on any investment, particularly those affected by the U.K.’s impending departure from the European Union.
Despite Germany’s position as Europe’s biggest economy, the euro currency strengthened in Monday morning trade. This as traders focused on news that Italy may agree to address its contentious budget plan as well as the weekend signing of the Brexit deal between the EU and the U.K.
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