The struggling UK recovery is unlikely to get any help from the eurozone this autumn after the sharpest slump for the region’s private-sector firms in more than three years.
The latest worrying snapshot of declining activity among Europe’s manufacturing and services firms comes on the eve of official estimates set to confirm the UK’s pull out of a double-dip recession.
Data compiler Markit’s output index — where a score under 50 signals contraction — sank from 46.1 to 45.8 in October, the biggest decline since June 2009.
Confidence among eurozone services firms is at its lowest ebb since the depths of recession in early 2009, the survey found.
Markit’s chief economist, Chris Williamson, said: “The underlying business climate has clearly deteriorated markedly in recent months.
“While GDP may decline only modestly in the third quarter, a steeper fall looks to be on the cards for the fourth quarter.”
With the eurozone already virtually certain to head back into an official, double-dip recession between July and September, the latest woes add to risks of the British economy shrinking again during the final three months of the year. The eurozone accounts for around 40% of the UK’s export market.
ING Bank economist Martin van Vliet said: “October’s decline is an unpleasant surprise and reinforces concern that the economic downturn in the region may be deepening and widening.”
