German investor sentiment collapsed in July, as fears that Germany could be plunged into recession continue to grow.

With Germany facing huge energy supply issues, as well as interest rate rises from the European Central Bank, the ZEW economic research institute reports that its economic sentiment index has dropped below levels seen during the initial stages of the Covid pandemic.

The index fell to -53.8 points, down 25.8 points from last month. ZEW’s index is based on a poll of 179 analysts and institution investors taken in early July.

The drop comes after the Nord Stream 1 gas pipeline closed until 21 July for annual maintenance, leading to concerns that it could remain closed due to the war in Ukraine.

Germany’s energy supplies have has suffered heavily as a result of Russia’s invasion of Ukraine as the country depends heavily on Russian gas supplies.  But supplies have been squeezed in recent months and could be cut off altogether. Only last week the head of Germany’s biggest union warned that many industries will be forced to ration electricity to keep going.