French business morale slumped for the second consecutive month in April as the Iraq war hit confidence, according to official figures today.
The national statistics office INSEE said its monthly index of business morale registered 92 in April, its lowest level since February last year and down from the 95 it touched in March.
The "general outlook" part of the index measuring firms' expectations for the future hit -59, the lowest recorded level since the index began in 1977.
The findings from 4,500 firms comes as expectations of a European Central Bank interest rate cute were fuelled yesterday when Germany's key Ifo business climate index fell unexpectedly in April and amid disappointing economy data in Belgium and Italy.
French business morale has been unsettled by publicity campaigns urging US consumers to boycott French products, particularly high-profile exports such as wine and cheese.
Business leaders have called on French President Jacques Chirac to ensure their companies are not damaged by diplomatic disputes over Iraq by taking steps to repair relations.
So far, the impact of the boycott calls has been limited, however, and recent indicators have painted an upbeat picture of the French economy, with consumer spending picking up in March and firms increasing production.