30 Jul 2008
Drastic drop in European economic confidence
According to a European Commission report, economic confidence in the eurozone sustained its most dramatic drop since 9/11.
The European Commission said that its closely watched index gauging the economic mood in the 15-member eurozone slumped by 5.3 points to 89.5 in July to fall to its lowest level since March 2003.
Analysts had forecast that the index would drop from 94.8 points in June to 93 points this month. “The eurozone economy is rapidly losing momentum,” said Matthias Rubisch, economist with Germany’s Commerzbank.
The July fall in the index was its biggest monthly decline since October 2001, the commission said with the growing threat posed by higher energy and food prices triggering rising inflation just as global economic growth is contracting. This is expected to result in preliminary data to be released Thursday showing eurozone inflation hitting 4.2 per cent in July, which is more than double the European Central Bank’s target of “close to, but just below 2 per cent”.
The survey also showed confidence dropping across the entire 27-member Union, with the biggest drops occuring in Britian and Italy due to weak economic growth and a slumping housing market.