BERLIN, Jan 24 Reuters Germany39;s Ifo institute again downgraded its 2024 economic growth forecast on Wednesday, citing uncertainty caused by changes to the federal budget necessitated by a court ruling.

The institute now expects Europe39;s largest economy to grow by 0.7 this year instead of 0.9 previously forecast in midDecember. In September, it had expected growth of 1.4.

Germany39;s economy shrank by 0.3 in 2023.

The November constitutional court decision left the government scrambling to revamp its 2024 budget to meet the new requirements while also reaching consensus among the coalition.

Ifo said that when it was preparing its forecast in December, it was unclear to what extent expenditures would be cut or taxes increased, and its baseline forecast had assumed that all planned fiscal policy measures would be implemented.

Now that the German parliament39;s budget committee has agreed on the federal budget, we estimate that it passed additional savings of just under 19 billion euros 20.66 billion, said Timo Wollmershaeuser, head of forecasts at Ifo.

The overall scope is roughly in line with what we estimated in our risk scenario for 2024 in December, he added.

Some economists are even more pessimistic than Ifo, with the IMK institute, which is close to the trade unions, predicting that the economy will shrink again this year by 0.3.

The head of Germany39;s BDA employers39; association said companies had lost confidence in the government and the framework…