A record supply crunch in German factories threatens to derail the industrial powerhouse’s recovery as its car giants are hit hardest by shortages and soaring prices.

Almost two-thirds of industrial firms in Europe’s biggest economy faced supply bottlenecks and delivery issues in the second quarter - shortages that could scupper Germany’s rebound, the Munich-based Ifo institute warned.

The share of industrial companies struggling with supply chain issues surged from 45pc to 64pc - well above the pre-Covid record of 20pc.

The country’s huge automotive sector is facing some of the biggest problems, with more than 80pc of its car manufacturers and suppliers reporting shortages. Its automotive titans, including Mercedes-Benz maker Daimler and Volkswagen, have been hurt by the global semiconductor shortage.

Klaus Wohlrabe, head of surveys at the Ifo, warned of a sharp rise in prices for manufacturers.

“This trend could threaten the economy’s recovery. Manufacturers are still meeting demand from their stocks of finished goods, but they are telling us that these are now also becoming noticeably depleted,” he said.

Signs of the factory recovery in the eurozone passing its peak also emerged on Monday as supply chain disruptions deepen.

The manufacturing purchasing managers’ index slipped from a score of 63.4 to a still-strong 62.8 in July, the lowest level since March, according to IHS Markit. Any reading above 50 signals growth.

However, the survey indicated that factories across the bloc faced a record increase in input costs and one of the largest lengthenings of delivery times ever recorded last month. Stocks were also depleted as firms struggled to access the goods needed.

Most countries’ manufacturing sectors suffered a slowdown from recent highs, but Germany enjoyed a slight uptick despite building supply chain worries.

Claus Vistesen at Pantheon Macro said the survey suggested “firms are now bumping up against capacity constraints”.

“Supply-side constraints, maxed-out capacity utilisation and crippling input price inflation are holding the sector back, even as demand is now, arguably, rebounding even more strongly in the context of reopening,” he added.

Chris Williamson, economist at IHS Markit, warned factories were “struggling to raise production fast enough to meet demand, driving prices ever higher”.

It came as the European Central Bank struck a gloomy note on the prospect that a release of pent-up savings will help drive the eurozone’s recovery.

In a paper released on Monday, ECB economists said it looked unlikely that households would increase consumption substantially in the coming months, with people more likely to hold most of their savings.

They added that “the scope for sizeable pent-up demand appears limited”, with pandemic restrictions continuing to limit spending opportunities in the hospitality and travel sectors.