Business and consumer confidence across the 27-nation European Union plunged to new low in February, an influential survey has revealed in the latest sign that the recession is continuing to deepen in the UK's largest export market.

Business and consumer confidence across the 27-nation European Union plunged to new low in February, an influential survey has revealed in the latest sign that the recession is continuing to deepen in the UK's largest export market.

The declining global economy seriously hampers the ability of any nation to trade its way out of recession - and the apparent advantages of weak sterling remain of little consequence to exporters in a world where demand has fallen off a cliff.

News of the latest survey, conducted by the European Commission, also came as the unemployment rate in Germany, Europe's largest economy, edged up to 8.5% in February following a much sharper rise the previous month.

The German jobless rate climbed from 8.3% in January, when it rose by nearly a full percentage point - making clear that the global economic crisis is digging its teeth into German labour market.

Earlier this week, the influential European Economic Advisory Group warned that while the eurozone economy as a whole was likely to muster modest growth of 0.3% in 2010, the German economy was expected to be the lone euro user to see its economy shrink next year.

The EEAG said the German economy was expected to decline in 2010 because its dependence on global trade would likely hinder recovery.

However, yesterday's EC survey, which charts both how industry and households see the European economy, hit its lowest point since the study began in January 1985.

The survey's results will doubtless increase pressure on the European Central Bank to attempt to stoke growth by slashing interest rates when it meets next week.

The European Commission blamed a general decline in confidence in most sectors for the study's dismal results, which also noted that industry was far more pessimistic than last month. At the same time, consumers were also "significantly" more worried about unemployment. Only retailers were slightly more cheery than in January.

Poland saw a sharp drop in confidence, with people also far more downbeat in the Nether- lands, the UK and Spain. Confidence was also down in Germany, France and Italy.

The jobless rate across the eurozone nations hit 8% in December, the highest in more than two-and-a-half years, as companies cut costs to cope with falling demand.

The European Commission said it expected some 3.5 million jobs to disappear this year across the union.

The eurozone fell into recession last year when quarterly growth shrank 0.2% in the second and third quarters and 1.5% in the fourth quarter.