According to a business sentiment survey by Ifo, German business morale fell more than expected in July. The institute in charge of the survey said the results come against the backdrop of high energy prices and looming gas shortages, leaving Europe’s largest economy on the verge of recession.
The Ifo institute’s business climate index fell to 88.6, its lowest level in more than two years. “The recession is knocking at the door. That can no longer be ruled out,” said polling chief Klaus Wohlrabe.
Germany faces the threat of gas rationing unprecedented in generations after a significant drop in supplies from Russia. Russia closed for 10 days this month the Nord Stream 1 pipeline that supplies gas to Germany through the bottom of the Baltic Sea. Some feared the closure could be further extended in response to Western sanctions imposed on Moscow.
Gasoline pumping resumed Thursday, but only at 40% capacity. Germany’s gas grid regulator said if gas through the pipeline continues to be pumped at just 40%, the country will need to take “additional steps” to reach 90% capacity and get through the winter without major problems.