Ukraine war knocks German business confidence

The business climate in Europe's top economy worsened in March, German survey data showed Friday, amid fears over soaring energy prices and deepening supply chain woes due to the Ukraine invasion.

"War in Ukraine sends Ifo business climate index crashing," said the Munich-based institute as its closely watched indicator plunged to 90.8 points from 98.5 in February.

"Companies in Germany are expecting hard times," Ifo president Clemens Fuest said, noting that the  "historic" 13.3-point drop in the indicator surpassed even the 11.8-point fall at the start of the pandemic two years ago.

Fuest said in a statement that the business climate in the flagship manufacturing industries had never declined so sharply, with  "optimism giving way to clear pessimism" in the business outlook as well. Bottlenecks in supply of raw materials and components were already weighing heavily on Europe's largest economy, which draws much of its strength from the export-strong sector.

Moscow's invasion of Ukraine has also sent prices for energy rising, with Germany in particular highly dependent on Russia for supplies of natural gas.