This month’s reduction in economic sentiment is the largest observed in a single month since April 2013, the month after Cyprus agreed with the terms of its bailout, which included losses for depositors at the two major Cypriot banks, and the second largest since October 2008, the month after the collapse of the Lehman Brothers which sparked the global financial crisis.

“The services confidence indicator declined sharply due to a deterioration in firms’ assessments of recent business conditions and a large drop in demand expectations,” the university’s Economic Research Centre (ERC) said in a statement on Tuesday.

The deterioration of business conditions was related to the business situation and demand over the past three months.

Confidence in the retail sector fell over less favourable assessments of past sales as interviewed companies revised their sales expectations downwards, the ERC said.

Companies in the construction sector revised their employment plans for the future downwards leading to a decline in confidence in the sector, the ERC continued. In industry, the decline in confidence resulted from a deterioration in the interviewed companies’ assessment of their order book and a downward revision of output expectations.

Households were less optimistic about the prospects of the island’s economy and the decline in unemployment, the ERC said adding that “downward revisions in consumers’ savings expectations too affected the Indicator negatively”.