Italian business confidence at a new low

Following the latest figures from research institute, ISAE‘s business confidence index, Italian business confidence is now at a 15-year low this month as the index dropped to 77.7 from 81.8 in September.

This drop was far sharper than economists had predicted as consumer confidence and consumer spending are at a decade low, as the financial crisis has caused a gloomier than predicted outlook on the economy.

This is despite the ease caused by the current fall in oil prices and the cuts in retail prices as shops do all they can to survive.

The current financial climate has made it very tough for companies to borrow money and make capital investments at an affordable price which is further proof that the credit crunch has now firmly hit the real economy.

This has now put further pressure on the European Central Bank to cut interest rates again even though they were reduced only a few weeks ago.

Analysts are now arguing that Italy, which is Europe’s fourth largest economy, is already in recession as the economy contracted by 0.3 percent in the second quarter amid fears that the figures yet to be released, regarding gross domestic product, will fuel the argument.

It is clear, though, that some companies are affected by the economic slowdown, most notably on new car sales that have declined for a ninth straight month as Fiat, Italy’s largest car manufacturer, is facing the pinch amid further job cuts.

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