German business morale improved unexpectedly in October, hitting its highest level in 2-1/2 years, suggesting company executives have become more optimistic about the growth prospects for Europe's largest economy. Sonia Legg reports
Yet more evidence that Germany is on the up. An influential economic institute says the business climate in October was at a two and half year high. Their survey suggests a widely expected slowdown may not be as severe as previously feared. (SOUNDBITE) (German) IFO ECONOMIST, KLAUS WOHLRABE, SAYING: "At the moment the German economy is based on three important pillars: the most important is German consumption, which remains very stable and is increasing. The prediction for income employment is also very good, which means that the German consumers will keep on buying. And investments are still going strong." The survey helped the Dax top 30 index touch a new 2016 peak. But some outside Germany still think there'll be an impact from Britain's vote to leave the EU. (SOUNDBITE) (English) CO FOUNDER, SEVEN INVESTMENT MANAGEMENT, JUSTIN URQUHART STEWART, SAYING: "Quite what level of trading impact we are going to have, what happens over the tariff wall, whether britain's going to be inside the single market or not and whether it is going to function. The Germans are likely to be pragmatic but the problem of course is with the EU you have to get everyone to be pragmatic and that's going to be really rather difficult indeed." But German company bosses don't see too many difficulties - and they're particularly optimistic about the coming six months. The survey's headline figure was driven by improved sentiment in the manufacturing and construction sectors. And positive signals from China and the U.S. were also pleasing exporters. Even an impasse over a free trade deal between the EU and Canada wasn't dampening the mood. The government now expects the economy to grow by 1.8 percent this year - the strongest rate in five years.