Italian business confidence is at its lowest ebb in nearly 20 years, a survey published yesterday revealed, amid signs that the country faces a deep recession well into next year.

The outlook is deteriorating despite exhortations by the government to consumers to keep spending, to banks to keep lending and to companies to keep producing their goods. Those appeals appear to be having no effect.

Italy, the third largest economy in the eurozone, is technically already in a recession. Indeed, it has suffered a decade of sluggish growth that has left its manufacturing base uncompetitive against producers such as China. Some economists predict the economy could shrink by up to 2% in 2009.

Financial Times