German business morale inched up to seven-month high in February. But will the strong start to 2015 from Europe's leading economy last? Hayley Platt reports
It may only be a small increase but improved business morale suggests Germany is starting 2015 on a strong footing. Ifo's business climate index hit 106.8 in February - behind some forecasts but still its highest reading since July. BGC Partner's Mike Ingram. SOUNDBITE: Mike Ingram, BGC Partners, saying (English): "Germany's got a very strong durable economy, clearly it got hit back by Russia in the first quarter of last year, a lot of that is going to drop out of the year on year comparison very very shortly and of course cheaper oil is going to benefit German manufacturing as indeed it will throughout Europe as the year progresses." The crisis in Ukraine has hurt many euro zone economies. But it seems the region's biggest has turned a corner. It's currently enjoying record-low unemployment, strong domestic demand and generally happier consumers. It's economy grew 0.7 percent in the fourth quarter. SOUNDBITE: Mike Ingram, BGC Partners, saying (English): "We've probably seen the worst of the impact from Ukraine in terms of trade and also business confidence. So I think there is reason to be reasonably constructive on the European economy." There are still fears about the possibility of a Greek exit from the euro zone and the contagion it could cause. But Ifo economist, Klaus Wohlrabe - sees that as the best option. (SOUNDBITE) (German) IFO ECONOMIST, KLAUS WOHLRABE, SAYING: "Greece is simply too expensive which is why the Ifo institute favours a scenario whereby Greece leaves the euro zone, but not forever, only temporarily, in order to carry out the necessary structural reforms. The problem with the current solution is that the fundamental problem is not being solved, it's only being postponed." That's not a view shared by everyone. Germany's economy may be able to withstand the shock but others may not be able to.