European confidence in the economic outlook dropped to the lowest on record in February, making action from the European Central Bank more urgent as the recession deepens. An index of executive and consumer sentiment in the euro region dropped to 65.4 from a revised 67.2 in January, the European Commission in Brussels said today. That is the lowest since the index was first published in 1985 and below the 68.5 forecast by economists, according to the median of 27 estimates in a Bloomberg News survey. German jobless figures and other data today also pointed to a worsening slump. Billions of euros of government stimulus measures have failed to stem a decline in confidence and the ECB is under pressure to follow the U.S. Federal Reserve and the Bank of England in outlining what additional tools may be used to haul the economy out of the worst recession since World War II. The ECB, which has cut its benchmark rate by 2.25 percentage points since early October to 2 percent, is expected to shave another 50 basis points off on March 5. “The indicators we’re looking at for February suggest the first quarter might not be that much better than the fourth,” said Nick Kounis, chief European economist at Fortis Bank in Amsterdam. “Hopefully this kind of data will make the ECB come to their conclusions about unconventional measures more quickly.” Unconventional Measures ECB Governing Council member Miguel Angel Fernandez Ordonez said yesterday that the Frankfurt-based bank was “obliged” to study the potential use of unconventional policy tools and a review of possible steps was “progressing.” Fellow council member Ewald Nowotny said on Feb. 17 that a discussion on unconventional measures was “going on in the ECB and we have to see how things develop.” Other European economic reports today added to the gloomy outlook as German unemployment rose in February for a fourth month and the Bloomberg purchasing managers index showed European retail sales fell for the ninth straight month. As banks tighten credit conditions, growth of loans to Europe’s households and companies also slowed for a 13th month in January, according to ECB figures. The euro-region economy contracted the most in at least 13 years in the fourth quarter, pushing it into a deeper recession as companies scale back output and shed jobs. Business confidence in Germany, Europe’s biggest economy, fell to the lowest in 26 years this month, the Munich-based Ifo institute said on Feb. 24. Plant Closures Germany’s BASF SE, the largest chemical company in the world, today said it will accelerate plant closures and cut at least 1,500 jobs after posting its first quarterly loss in seven years. Amsterdam-based Wolters Kluwer NV, Europe’s biggest tax and legal publisher, yesterday said it will freeze salaries of executives and about 200 managers this year to curb costs amid the economic slowdown after sales missed management forecasts. Sales at Volkswagen AG, Europe’s biggest carmaker, fell 21 percent in January, and the European Union yesterday forecast EU auto sales will drop as much as 18 percent this year. European heavy-truck sales plunged 35 percent last month, more than double the drop in December. The International Monetary Fund predicts the euro-area economy will shrink 2 percent this year and IMF Managing Director Dominique Strauss-Kahn said on Feb. 19 that the forecast may need to be lowered as the global economic slump deepens. A measure of manufacturers’ confidence fell to a record low in February, the commission report showed today, as did consumer sentiment. Manufacturers’ employment expectations declined for the 11th straight month. With oil prices down almost 70 percent from a July peak, consumer-price expectations fell for a fourth month in February, today’s survey showed.

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