Page last updated at 10:18 GMT, Monday, 25 January 2010

German consumer confidence fades

Munich
A German spending spree "seems unlikely"

German consumer confidence is fading, hit by the threat of unemployment, according to a survey.

The GfK market research group consumer climate index stood at 3.2 points in February, down from 3.4 in January.

"In terms of consumption, 2010 is likely to be a more difficult year than 2009", said the group.

Europe's biggest economy contracted by 5% in 2009 - its worst fall for 60 years. GfK reported concern over a slight weakening in economic recovery.

The consumer confidence indicator is based on a survey of about 2,000 Germans.

Saving not spending

"This is confirmation that a growth contribution will not come from private consumption this year," said Klaus Schruefer of SEB.

"The tax cuts are definitely having a stabilising effect, but consumers will save rather than spend a lot of that," argued Mr Schruefer. "The economic recovery will have to come from exports this year," he suggested.

Other analysts suggested that a political debate on whether or not to cut taxes had dented consumers' optimism.

"Looking ahead, a spending spree seems rather unlikely given Germans' inclination to save," said Carsten Brzeski of ING Financial Markets.



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