Brexit chips away at German consumer morale

Households digest Britain’s vote to quit EU

FRANKFURT, July 27, (AFP): Confidence among German consumers suffered slightly in July as households digested Britain’s vote to quit the European Union, a poll found on Wednesday.

Last month’s Brexit was “an important reason why uncertainty about future economic developments grew slightly,” market research company GfK said in a statement.

While the headline figure increased to 10.1 points from June’s 9.8, the sub-index covering economic expectations suffered an 8.6-point fall to 9.4 points.

More than half of the people surveyed said they expected negative consequences for Germany from Brexit.

At present, there’s little indication Brexit will lead to job losses in Germany, the pollsters noted.

The researchers still believe that “private consumption will be an important pillar of the German economy” this year — with consumer spending expected to rise by up to two percent over the whole of 2016.

“This is supported by the continuing good employment situation as well as the considerable growth in income with very low inflation,” they said.

But they added that “uncertainty could increase because of the current elevated terror risk in Germany” after a series of bloody assaults — two of them claimed by the Islamic State group — hit the country over the course of a week.

Looking forward to August, the researchers expect a slight decrease in the headline index to 10.0 points.