Cyprus woes set to deepen eurozone economy gloom


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The Independent Online

Financial turmoil in Cyprus risks dragging Europe’s economy deeper into the mire after a worsening decline for manufacturers and services, experts warned today.

Financial data provider Markit’s latest snapshot of the eurozone’s private sector sank deeper into the red in March, signalling increasing economic pain for the second month in a row.

Manufacturing output fell in March at the fastest rate since December, while the service sector suffered the steepest decline since October as confidence plummeted to a three-year low.

France saw the biggest plunge in private-sector output for four years while Germany, the single currency bloc’s economic engine room, registered its slowest growth  this year.

Markit’s chief economist Chris Williamson said the eurozone was on course for a 0.3% decline during the opening quarter of the year. But the woes of Cyprus, scrambling to secure a bailout after its politicians rejected a hugely controversial savings raid on deposits and facing the prospect of a bank run, have put the region’s debt woes firmly back in focus.

He said: “The concern is that the downturn has gathered pace again. The deteriorating situation in  Cyprus also raises the prospect of business and consumer confidence falling further across the single currency area.”