German confidence plumbs the depths

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FRANKFURT - Business confidence in western Germany has hit rock bottom, with most companies expecting their exports and investment to decline again this year while more people become jobless, writes John Eisenhammer.

The German Federation of Chambers of Commerce (DIHT) said yesterday that its spring survey of more than 20,000 western firms had produced the most depressing results since 1985.

Only 12 per cent of respondents expected an improvement in economic performance in the foreseeable future, while 48 per cent expected things to deteriorate.

Only 16 per cent of firms expected to better their 1992 export performance, while 37 per cent said prospects had deteriorated.

The federation's said confusion over economic policy and continuing speculation about tax increases had undermined confidence.

Separately, Hans Tietmeyer, the Bundesbank vice-president, warned that the key to a further easing in interest rates lay more than ever in Bonn's hands now that inflation, monetary growth and wage settlements were pointing down.