Germany’s economy shrank, and it’s facing a spending crisis that’s spreading more gloom

By DAVID McHUGH
AP Business Writer

FRANKFURT, Germany (AP) — Germany’s economy shrank in recent months, and business confidence is still in the dumps. The figures released Friday come as the government is struggling to overcome a budget crisis that threatens to exacerbate problems in what was already the world’s worst-performing major developed economy. Europe’s largest economy shrank 0.1% in July-to-September quarter as inflation eroded people’s willingness to spend. Meanwhile, the closely watched Ifo institute survey of business optimism showed a tiny uptick to 87.3 for November from 86.9 in October but remained well below its July level. The budget crisis has raised the possibility of deep spending cuts next year.