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BRUSSELS, Dec 22 (Reuters) - The Belgian business confidence index, a bellwether for the euro zone, fell in December to a record low as manufacturing sentiment dropped sharply, putting more pressure on the European Central Bank to cut rates further.
The index, often referred to as the leading indicator, dropped to -31.3, its lowest level since records began in 1980, from -23.7 in November, the central bank said on Monday.
The figure was worse than the most pessimistic forecast in a Reuters poll of 12 economists which produced a median forecast of -26.5, with a range from -30.0 to -20.0.
"The confidence of business chiefs again fell noticeably in manufacturing industry. The decline was less pronounced in construction and commerce," the bank said in a statement.
Steven Vanneste, an economist at Fortis, said that the serious impact of the financial crisis was clear.
"The financial crisis is impacting the real economy through sentiment. This fear has to be resolved."
Last week, the closely watched German Ifo business climate index also fell for the seventh month in a row and by more than expected in December to its lowest level since 1982.
Belgium, whose economy expanded by 0.1 percent in the third quarter, is widely believed to have entered recession in the final three months of the year.
Its very open economy feels the pain of its neighbours and a number of companies, including Ford, steel giant ArcelorMittal and steel cord maker Bekaert, have made headlines with job cuts in Belgium.
The European Central Bank cut interest rates by 175 basis points in three monthly moves since October to 2.5 percent but has signalled it could pause in January to see the effects of the cuts before easing policy any further.
"At the moment the ECB needs to put out the fire, which they can only do by lowering interest rates as much as possible to get the engine running again," Frank Lierman, economist at Dexia said. (Reporting by Antonia van de Velde and Philip Blenkinsop; editing by Stephen Nisbet)