BERLIN, June 19 (Xinhua) -- German companies are increasingly concerned about a dampening of growth prospects in Italy and Spain, a study by the Association of the German Chambers of Industry and Commerce (DIHK) found on Tuesday.
According to the study, recent political developments in Italy and Spain were seen as posing a potential threat to the ongoing economic recoveries of the two Eurozone countries.
The findings were based on a survey among German companies operating in Southern Europe, which was conducted by the DIHK's foreign branches in Italy, Spain, Greece and France.
In Italy, the controversial fiscal plans of the new coalition government formed by the Lega Nord and Five Star Movement parties was cited as creating significant unease on behalf of German companies, with presences in the Eurozone's third largest economy.
"Fiscal discipline and efforts to lower public debt are being put on the backburner (by the newly-inaugurated cabinet), undermining the international competitiveness of Italy as a base for production", the DIHK commented on the development.
Amongst others, the governing cabinet led by prime minister Giuseppe Conte in Rome wants to introduce a basic minimum income and slash income taxes in spite of Italy's already high level of public debt at 132 percent of gross domestic product (GDP) in 2017. Although the Italian economy is currently experiencing a phase of moderate growth again, 59 percent of respondents consequently indicated that economic framework conditions posed the greatest risk to their business models.
Similarly, German companies operating in Spain drew attention to uncertainty posed by recent political upheaval as a source of concern.
The DIHK argued that it was too early to tell whether the new prime minister Pedro Sanchez would continue along a path of structural reform and fiscal consolidation which has witnessed a return to strong GDP growth rates (plus 3.1 percent in 2017) in Spain during recent years.
The DIHK further highlighted the unresolved political conflict between the Catalan regional and Spanish central government.
By contrast to growing uncertainty in Italy and Spain, German firms polled in France and Greece were more upbeat about their future prospects.
DIHK pointed out that respondents had offered widespread praise for the reformist course adopted by French president Emmanuel Macron in France and the Eurozone as a whole.
In Greece, falling unemployment, faster growth and the nearing end of the country's European bailout program in July also inspired more confidence on behalf of German companies.
The study further noted that a majority of respondents in all of the four countries assessed by DIHK indicated that they anticipated an improvement of business conditions in the short term.
Speaking to Xinhua on Tuesday, Juergen Matthes of the Cologne Institute for Economic Research, also emphasized that for the time being the Eurozone was still experiencing a "broad-based period of economic strength."
According to Matthes, this circumstance at least in part also owned to "comprehensive economic policy reforms" which Southern European countries had underwent since the 2007/08 crisis. "Policymakers must not squander these successes", the expert warned.?
