Eurozone economic confidence falls to fresh two-year low as UK sentiment also falls

Eurozone economic sentiment has fallen for the eighth consecutive month as the bloc continued to be plagued by weaker industry and construction confidence.

Consumer, retails and services confidence improved in February but the manufacturing sector fell for a third month in a row.

Read more: Eurozone inflation falls in January as energy prices continue to drop

The overall picture remained bleak for the euro area as sentiment fell to a new two-year low.

ING economist Bert Colijn said the results would not help the European Central Bank in its debate over whether the slowdown is temporary or permanent.

He said: “While February’s surveys do justify some optimism about a cautious bounce back, the manufacturing sector problems and downside risks like Brexit and higher tariffs for the auto sector could still develop into something serious.”

The EC survey also revealed a drop in UK economic sentiment, which fell below the benchmark 100 points to its lowest since February 2013.

The fall was led by a sharp decline in sentiment in the services sector, while confidence also fell among industrial and construction firms.

“The sharp fall in the European Commission’s sentiment indicator, to its lowest level since February 2013, demonstrates that Brexit uncertainty is greatly depressing business confidence,” Pantheon Macroeconomics economist Samuel Tombs said.

Read more: Is this a EU turn in the Eurozone's economic prospects?

He added that while the survey was undertaken before the Prime Minister Theresa May promised MPs a vote on delaying Brexit, it would do little to help confidence.

He said: “A three-month extension of negotiations merely prolongs the uncertainty that is prompting business to postpone investment and hiring decisions.”