Business confidence fell as a result of growing concerns about Russia cutting off its gas supply.
The Ifo Institute gauge for business sentiment, closely monitored by the Institute, sank in June after a slow recovery from the shock caused by the invasion of Ukraine.
Cartsen Brzeski, an economist at ING, stated that “Stagflation for most of the year remains our base scenario for the German economy. An outright recession is our threat scenario.”
Robert Habeck, Economy Minister, warned that the country could face an industrial shut down if there is a shortage of fuel this winter.
Interview with Mr Habeck: “Companies will have to stop production, lay off their workers, supply chains will collapse, people will go into debt to cover their heating bills, and people would become poorer.”
According to Germany’s network regulator, consumers may see their energy prices double or triple due to the current crisis.
Bundesnetzagentur’s Klaus Mueller told broadcaster ARD that the regulator had looked at many scenarios and concluded that none were “pretty and either too little gas at winter’s end or very difficult winter situations”.
RWE, the German utility group headed by the head, warned that the Kremlin could cut off energy supplies and cause chaos on the continent.
Markus Krebber, told the Financial Times: “The real worry I have is that European solidarity may come under significant stress”
