The German business climate has deteriorated more than expected this month, according to a survey yesterday that will reinforce the European Central Bank's decision to exercise caution over the extent of any rate increases.

The fall in the Munich-based Ifo institute's business climate index came as political pressure on the ECB intensified ahead of December 1, when the bank has indicated it will lift its main interest rate to 2.25 per cent from the 2 per cent level set in June 2003.