A closely watched survey shows that business confidence in Germany, Europe's biggest economy, has dropped unexpectedly as managers' assessment of both the outlook and their current situation darkens.

The Ifo institute said Thursday that its confidence index fell to 106.2 points for August from 108.3 in July. Economists had predicted a slight increase to 108.5.

The drop took the index to its lowest level since December 2014. It follows a much smaller decline in July immediately following Britain's vote to leave the European Union.

Official figures released this month showed that the German economy grew 0.4 percent in the second quarter compared with the previous three-month period — a slower pace than its 0.7 percent growth spurt in the first quarter, but double what economists had expected.