European economic confidence saw its biggest ever fall in October as the global bank crisis generated the bleakest outlook since the early 1990s, according to the findings of this months European Commission economic sentiment survey. The survey results give us just one more dramatic illustration of the devastating impact the financial turmoil is having on the real economy. Pessimism has risen dramatically on all fronts - from manufacturers' expectations about exports to consumers' fears about unemployment.
These gloomy results now make it almost a certainty that the European Central Bank will cut its main interest rate by at least half a percentage point to 3.25 per cent when it meets next week.
The European Union executive's "economic sentiment" indicator for the 27-country bloc fell by 7.4 points in October to 77.5 points. The latest index reading was the lowest since 1993 and marked the largest month-on-month decline ever recorded.
Among the largest EU members, confidence deteriorated most markedly in the Netherlands followed by France, Italy, the UK and Poland.
At the same time, the increasingly-worrying outlook for previously fast-growing eastern European economies is hitting business and reducing export opportunities across the rest of the continent. Details of the latest survey showed EU manufacturer reported export order books at their thinnest since June 2005. Consumers' expectations about unemployment trends in the next 12 months were the gloomiest since March 1994.
Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.