German businesses have been losing confidence in the current economic climate as growth prospects worsen. The ifo Institute that published the survey pointed to high energy prices.
Morale among German businesses has fallen as rising prices for goods and fuel dampen growth prospects, according to a survey by the German ifo institute think tank published on Monday.
"High energy prices and the threat of gas scarcity are a burden on growth," ifo President Clemens Fuest said. "Germany is standing on the cusp of a recession."
What did the survey reveal?
The ifo business climate index fell almost four points from 92.2 in June to 88.6 in July. The index measures businesses' confidence in the current climate in comparison to a reference point set in 2015.
It is based on a survey of around 9,000 managers from across the German business community.
The fall in confidence represents a new downward trend following over a year of recovery since the lows seen in early 2020 when the coronavirus pandemic broke out.
July's confidence index number represents the lowest point since June 2020.
Germany is heavily reliant on Russian gas and the threat to its supply has brought up the question of whether Germans will be able to afford to heat their homes over the winter.
The government has said it will increase its gas storage requirements and take measures to save more gas. It also announced that it would bail out the energy supplier Uniper, which could lead to higher prices.