German Business Confidence Slips

For the third month in a row, business confidence in Germany. Although the fall was lower than expected, analysts said it pointed to a bigger drop in the months ahead. The widely watched monthly Ifo survey stood at 104.9 points in September compared with 105.0 in August.

"The results suggest that generally robust economic growth will continue, but we must expect a slowdown at the start of next year," Ifo board member Gebhard Flaig said.

The German economy faces a number of hurdles next year, starting with the introduction of a higher value-added tax, which is rising to 19% from 16%. The VAT rise is expected to put the brakes on already weak consumer spending, while Germany is also expected to be adversely affected by a U.S. economy which is starting to drag its feet.

Growth of the German economy, the biggest in the 12-country eurozone, is at its highest level for five years, although it is set to slow in the third quarter of this year.

Copyright Agence France-Presse, 2006

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