Even before the escalation in Cyprus debt crisis, economic confidence in the 17-nation currency bloc deteriorated in March, putting on hold the recovery that had started in November last year, survey results from the European Commission showed Wednesday.
The Eurozone economic sentiment index came in at 90, down from 91.1 in the previous month and below the consensus forecast of 90.5. The relapse was driven by decreases in all business sectors, while consumer confidence remained broadly stable.
Economic confidence is set to weaken further in the months ahead as the crisis takes its toll in Cyprus after the government decided this week to shut down the largest bank in the country and impose a levy on large deposits in the banks, in a bid to secure a EUR 10 billion EU-IMF bailout.
Data suggests that economic contraction is continuing and heaps pressure on the European Central Bank to cut interest rates, IHS Global Insight's European Economist Howard Archer said.
Not only does further Eurozone GDP contraction now look very likely in the first quarter, but prospects for the second quarter are looking increasingly worrying, he noted.
In March, the industrial confidence index fell by 1.2 points to -12.5, due to a much more negative assessment of the current level of overall order books and a slightly weaker view of stocks of finished products. The indicator was forecast to fall to -12.
Services confidence halted its upward trend observed since October 2012. The corresponding indicator dropped to -6.7 from -5.3. Driven by a worsened assessment of all the three sub-components, confidence among retailers deteriorated to -17.6 from -16.1.
Retail trade confidence decreased 1.5 points to -17.6 in March, driven by a worsened assessment of all three components namely the present business situation, business expectations and the volume of stocks.
Due to a worsened assessment of order books and employment expectations, construction confidence fell to -30.3 from -29.7 a month ago.
Meanwhile, consumer confidence remained broadly stable at -23.5 in March. Consumers were less pessimistic regarding their unemployment expectations, while slightly more pessimistic regarding their savings expectations over the next 12 months.
A separate survey from the EC showed a decline in business confidence to -0.86 in March from -0.72 in February.
The assessment of current order books and past production declined markedly. Also the assessment of the adequacy of stocks of finished products worsened, albeit to a lesser extent. Meanwhile, production expectations remained virtually unchanged in March, the survey showed.
For comments and feedback contact: editorial@rttnews.com
Business News
April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.