From June to October business confidence plunged to its lowest level since the financial crisis began in 2008/9 according to the latest edition of Pulse - KPMG's Global Business Outlook Survey.

Europe witnessed the most dramatic drop, with business sentiment hit strongly by the region's ongoing debt turmoil. But this survey shows that gloom has spread across the globe, impacting both developed and emerging economies alike.

"Businesses around the world are grappling with massive uncertainty that is driving down sentiment across the board," says Mark Goodburn, KPMG's Global Head of Advisory.  

"The world is in the midst of a prolonged and deep crisis of sentiment. Clearly, the European contagion has already spread and is exacerbating weaknesses in other economies around the world. In particular, the manufacturing sector has seen a substantial drop in confidence, likely reflecting their exposure to a weaker global trade environment."

EU respondents in both the manufacturing and service sectors reported marked declines in optimism, falling to the lowest levels since 2009, when firms were still reeling from the post-Lehman global economic crisis.

October's Pulse results show that the two biggest Eurozone economies, Germany and France, have suffered further steep declines in confidence. Growth across the euro area periphery is also forecast to remain weak with growth in Greece expected to outright contract. In fact, sentiment has weakened since June in all European countries surveyed with the exception of Ireland.

Concerns about the knock-on effects from Europe, combined with a continuing softness in global economic conditions, have also taken a toll on growth expectations in the emerging markets.

BRIC area companies signaled a drop in optimism for the second consecutive survey period, reaching the lowest level in about three years. Much of this deterioration is influenced by falling sentiment in China, which has seen a slowdown in domestically-led expansion as a result of policy tightening measures, making Chinese firms the least optimistic of the BRIC countries.