Why German businesses are feeling strangely jolly

It’s hardly been a good year for the global economy.

But as 2020 ends, German firms are feeling surprisingly festive.

New figures out Friday (December 18) show a sharp rise in morale.

December’s Ifo business climate index jumped to 92.1, when analysts had forecast a drop.

Economists say a combination of government aid and strong exports to China has limited damage from lockdowns.

And Ifo president Clemens Fuest says the good news definitely isn’t limited to overseas shipments.

Domestic industries like transport and logistics have done well, he says, thanks to good industrial activity and also online trading.

The new numbers suggest Germany could avoid an economic contraction in the fourth quarter.

There are caveats though.

Many firms submitted their survey responses before Germany’s latest lockdown kicked in.

And then there’s the question of a post-Brexit trade deal for Britain - a big market for German goods.

Michael Schmidt is president of the British Chamber of Commerce in Germany:

“Whether there is a deal or not, there will be massive changes at the start of the year. Many businesses and members of the British Chamber of Commerce in Germany are telling us that they expect January to be bumpy, and that's putting it very diplomatically.”

Germany’s government has provided billions of euros in aid to support companies, families and freelancers.

But the country is now in another hard lockdown due to last until January 10.

Next month’s business morale may depend on that date not getting pushed back.