BRUSSELS (AFP) - Eurozone economic indicators to be released in the coming week will show that business and consumer confidence is falling and that inflation is rising again, economists said.
British data are meanwhile expected to provide further evidence of a widespread slowdown in the British economy is likely to emerge in the coming week.
One of the key eurozone surveys for the week, Germany's Ifo index, is expected to show a decline in confidence in the bloc's largest economy when it is published on Monday.
"The Ifo index declined for the second consecutive month in September, as companies' assessments of both current and future conditions deteriorated," Royal Bank of Scotland economists said in a research note to clients.
"Companies are likely to downgrade their assessments even further this month," they said.
They cited August's decline in industrial output and retail sales coupled with soft purchasing managers' index reports for the manufacturing and service sectors in September.
In addition, sluggish global demand plus the stronger euro and soaring oil prices meant that "even more companies are likely to pare back their growth forecasts," they said.
Bank of America economist Lorenzo Codogno said: "The Ifo index has been declining since the beginning of this year as a result of a modest improvement in current conditions and a sharp decline in expectations."
Codogno said a further deterioration in the expectations component of the index would bode ill for industrial activity for the rest of this year and the start of 2005.
UBS economist Ed Teather said he expects "the softening in the German Ifo to continue" and the European Commission's eurozone confidence surveys, due on Friday, to show a decline.
Codogno agreed that the surveys "should be watched for potential signs of weakening in confidence," particularly in the industrial sector.
Royal Bank of Scotland economists predicted eurozone confidence would be "subdued" and that industrial confidence "will have taken another knock".
On the inflation front, preliminary October figures for Germany, Italy and the eurozone as a whole are expected to show the impact of surging oil prices.
"Inflation is forecast to spike back up to 2.3 percent -- their is even a risk of 2.4 percent -- from 2.1 percent," Royal Bank of Scotland economists said.
"Inflation remains largely an oil price story. Most of the increase will come from higher gasoline prices and increases in utility bills, though higher clothing prices will also have contributed this month," they said.
As for Britain, analysts said the second-tier releases will show both consumer and manufacturing sentiment slipping in the wake of higher borrowing costs and a stalling global economic recovery.
The releases are likely to cement expectations that the Bank of England will not raise interest rates again this year.
A raft of weak economic data in recent weeks has convinced most Bank watchers that the rate-setting Monetary Policy Committee will keep its key repo rate unchanged at 4.75 percent at November's rate-setting meeting.
The MPC has raised the cost of borrowing a quarter point on five occasions since last November in an attempt to curb inflationary pressures stemming from rampant consumer demand and above-trend economic growth.
Tuesday sees the release of the Confederation of British Industry's quarterly industrial trends survey and this, like other recent surveys into the manufacturing sector, is set to weaken further.
"A soft survey would suggest that the manufacturing recovery is weakening and in danger of disappearing altogether," warned Jonathan Loynes, chief economist at Capital Economics.
A clearer picture of cooling consumer demand is expected to emerge, when the Nationwide, the UK's largest building society, publishes its monthly survey into house prices some time during the week.
Royal Bank of Scotland chief economists Geoff Dicks said he expects to see house price inflation declining well into next year given the number of mortgage approvals continue to fall.
Meanwhile, official figures from the Bank of England are expected to show that net mortgage lending in September did not change too much from the slowdown from August's notable slowdown.
10/24/2004 - 09:43 GMT - AFP