Spending downturn

The survey, conducted by the Society for Consumer Research (GfK), saw consumer confidence drop two points from 3.7 in May to 3.5 for June, the fourth consecutive fall.

"The crisis surrounding government debt in the eurozone and discussions about the stability of the euro have unsettled German consumers and put a slight damper on the present consumer climate," the group said in a statement.

It said there was a growing fear among Germans that they will end up facing tax increases imposed in a bid to balance the books after the Greek bailout.

There was also concern among the 2,000 respondents that a high budget deficit would have a negative knock-on effect on wages.

Germans are better known as big savers than big spenders, and the survey reflected the worry that their savings were at risk of losing value if the euro continues to fall.

An analyst with the ING financial service group said that in the first quarter of 2010, the household saving ratio in Germany had climbed to its highest level since 1993.

Berlin is already under pressure from other countries in the eurozone and from the US to encourage consumer spending.

Rolf Buerkl of the GfK said if talk about the stability of the euro and the national debt tails off in the foreseeable future, there is a good chance that the focus will shift to positive elements of the current economic climate, such as the strong employment market.

That being the case, he said consumer confidence would stabilize.

tkw/AFP/AP

Editor: Sam Edmonds