Brexit risks advances German investors’ confidence

German investors remained confident about German economic prospect despite risks that Britain might choose to leave the European Union in a referendum this week, a survey found on Tuesday.

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Mannheim-based ZEW institute said its monthly economic sentiment index for Germany improved by 12.8 points and reached 19.2 points in June, showing that investors and market analysts were more confident than in the previous month about German economic outlook in six months ahead.

Germany flag“The improvement of economic sentiment indicates that the financial market experts have confidence in the resilience of the German economy,” said ZEW President Achim Wambach in a statement.

“However, general economic conditions remain challenging,” he added, “Apart from the weak global economic dynamics, it is mainly the EU referendum in Britain which causes uncertainty.”

German economists and business groups have warned that a Brexit would hurt both British and European economies.

In a separate survey on Tuesday, ZEW found that most investors and market analysts expected Britain to remain in the European Single Market even if the country votes to leave on Thursday. However, uncertainty about the country’s relations with the EU would remain in place.

“The UK would face years of fundamental uncertainty regarding its future in Europe if the referendum result is for leave,” said Friedrich Heinemann, head of the ZEW “Public Finance” Research Department.

According to the survey, investors and analysts expect that in case of a Brexit, the probability of a recession in Britain in the coming 12 months would increase by 44.9 percentage points, while the danger of a recession in Germany and the euro zone would only grow marginally. Enditem

Source: Xinhua/NewsGhana.com.gh

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