European confidence near 2-year low

Euro Zone: A new reading of European economic confidence hit its lowest level in almost two years as Greece teeters on default.

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Confidence in Europe's economy neared a two-year low this month, according to an official survey released yesterday.

The sharp decline in confidence of both business leaders and consumers, as measured by a European Commission (EC) survey, comes as the continent's debt crisis deepens amid fears of a Greek default.

The confidence index fell from a reading of 98.4 last month to 95 this month, coming in worse than economists expected and reaching its lowest level since December 2009.

"September's fall in the European Commission measure of business and consumer sentiment adds to evidence that the euro-zone economy is on the brink of recession," Ben May, an economist at Capital Economics in London, said in a note.

He said the figures "confirm that the consensus outlook for the euro zone is far too optimistic". Capital Economics expects GDP in the euro zone to shrink by 0.5 per cent next year.

The EC index measures confidence about the economy from a range of sectors and geographies. In this month's survey, industry's confidence fell for the seventh straight month. Consumer and service-sector sentiment fell for the third straight month. The geographical spread of falls in confidence was also wide, with the sharpest declines in the continent's biggest economies.

The drop in confidence comes at a difficult time for Europe. After IMF and World Bank meetings in Washington last weekend, European officials had hoped to come home unified and with a new resolve to tackle the crisis.

IMF, EU and European Central Bank officials arrived in Greece yesterday to take another look at the country's finances after its parliament passed a controversial new property tax on Tuesday.