German IFO nosedives in August, shows Brexit has weighed heavily on sentiment among executives

Data released by the Munich-based Ifo economic institute showed Germany's business climate index deteriorated sharply in August, posting the steepest monthly drop since the height of the euro zone debt crisis in 2012. A survey showed on Thursday that German Ifo business climate index fell to 106.2 in August from 108.3 in July. The headline figure missed Reuters consensus forecast for a rise to 108.5.

The drop was equally driven by decreases of both the current assessment and the expectations component. Corporate expectations in Europe's biggest economy over a six-month horizon fell to 100.1. The expectations component is now at its lowest level since October 2014, suggesting many firms expect economic headwinds.

The Current Assessment Index decreased to 112.8 in August from 114.8 a month earlier, data was revised from an initial reading of 114.7. Analysts had expected the index to inch forward to 114.9.

Carsten Brzeski, Chief Economist at ING, suggests that it seems that German businesses always take a bit longer to digest the news but today’s Ifo suggests that German businesses have suddenly woken up to Brexit reality.