May 23 - The downturn across euro zone businesses has eased slightly but a dearth of new orders offers little hope for the second quarter. As ECB boss Mario Draghi prepares for a keynote speech in London many are asking whether it's time to do more than cut interest rates? Kirsty Basset reports.
European businesses are still struggling, but slightly less so than in previous months. A new Markit survey of around 2,000 euro zone businesses has found the downturn eased slightly - but further contraction could be ahead in the second quarter due to a slowdown in new orders. Rob Dobson is a senior economist at Markit. (SOUNDBITE)(ENGLISH) MARKIT SENIOR ECONOMIST ROB DOBSON SAYING: "I suppose there was one bright spot - the rate of contraction in the periphery did ease which given the sharp rates we've been seeing there is a minor positive in itself but again we're still seeing broad-based manufacturing services across most nations contraction which is a very weak position for the euro zone to be in." European businesses are still floundering below the 50 mark which divides growth and contraction. France in particular is suffering and there are fears their troubles could filter through to their neighbours. The key question for many now is what the European Central Bank will do next. Tobias Blattner is a European economist at Daiwa Capital Markets. (SOUNDBITE)(ENGLISH) EUROPEAN ECONOMIST AT DAIWA CAPITAL MARKETS, TOBIAS BLATTNER SAYING: "The ECB will have a very close look at all of this data and then come to an assessment at its next meeting in June and it might bring even further rate cuts in June." But will tinkering with interest rates be enough? Tobias Blattner rates Mario Draghi's performance as governor of the ECB very highly and is confident he will pull more 'tools' from the toolbox as needed. (SOUNDBITE)(ENGLISH) EUROPEAN ECONOMIST AT DAIWA CAPITAL MARKETS, TOBIAS BLATTNER SAYING: "We're sure that the ECB will actually if now the situation would deteriorate further will come up with other, possibly an ABS program that will then help to tackle the current situation." Just under ten months ago, Draghi delivered a pivotal speech in London where he pledged to do 'whatever it takes' to save the euro. As he prepared to speak in London there were hopes of another game changing promise.