Consumer confidence in the 12 European countries using the euro currency collapsed in March to its lowest level in almost nine years as the war in Iraq has put companies off from investing and from hiring personnel.
"The situation gets worse every day," said Gerhard Humer, an economist with UEAPME. "An increasing number of people are afraid they will lose their jobs".
UEAPME is a lobby group that represents seven million small and medium sized businesses in Europe.
European statistics agency Eurostat has said the index of consumer confidence slipped 2 points to minus 21 in March. The index stood at minus 19 in February and reached a record low of minus 29 in August 1993.