German business confidence has hit a 15-year high, according to the closely watched Ifo index, sending the euro soaring yesterday.

The Ifo index rose to 105.4 points in March, up from 103.4 in February, its highest level since the post-unifcation boom days of April 1991.

"We see that this is a real economic recovery," said Klaus Abberger, economist at Munich's Ifo economic institute.

The upswing has won depth and breath in the last months, spreading to the retail and even the problematic construction sector, according to the survey of 7,000 German managers.

"Now we have the chance that we will have a normal economic recovery over three years," said Mr Abberger, something Germany hasn't experienced since the post-unification bubble burst.

He said a further ECB interest rate rise, expected in May or June, would not pose a problem for business expectations. But he warned that the price of oil had "stablised somewhat but remained volatile".

The continued rise in business confidence surprised leading economists yesterday. Holger Schmieding, European economist with Bank of America, warned that the current business confidence high appeared "almost too good".

"One cannot forget that (business) expectations of companies are very gloomy," he told Der Spiegel.

"The level of expectation is by now so low that even a minor improvement is judged positively."

Nevertheless the data suggest German consumers are beginning to spend again after years of "angst-saving" brought on by job-loss fears.

"The Germany economy is in a tailwind ... the good mood is in unison with the signals from economic indicators," said economic minister Michael Glos.