German business confidence has tumbled again according to a closely-watched survey that will add to the pressure on the European Central Bank to cut interest rates.

The Munich-based Ifo institute said its business climate index dropped for the fourth consecutive month, from 93.3 in April to 92.9 this month the lowest level since August 2003. Hans-Werner Sinn, Ifo's president, said in a statement that an improvement in the economic situation in the next few months “is not to be expected”.