Unemployed Juan Bayes resorts to begging in Seville. Spain's unemployment rate currently stands at just over 26%. Photograph: Marcelo Del Pozo/Reuters
Europe's woes deepened on Tuesday after surveys revealed much of the continent locked into a spiral of declining manufacturing output and rising unemployment.
Predictions that the eurozone economies would stage a recovery this year appeared to be woefully wide of the mark as a long-run contraction in manufacturing accelerated and the number of unemployed people in the eurozone reached 12%. Across the wider, 27-country EU the total number of jobless is a record 26.3m.
Britain failed to shake off the gloom after bad weather and weak demand from the eurozone left the UK manufacturing sector contracting for a second successive month in March.
Factories in Germany and Ireland, which fared well last year compared to their counterparts in Spain and Portugal, also fell back into decline in March according to the purchasing managers index (PMI) compiled by Markit.
The eurozone manufacturingPMI fell to 46.8 from 47.9 in February – slightly better than an preliminary estimate of 46.6, but extending its run below the 50 mark that separates growth and contraction for a 20th month. Separate data showed European car sales shrank 8.2% across Europe last year to a 17-year low of 12.05 million vehicles, reflecting declining wages and higher unemployment.
Car makers blamed much of the decline on consumers postponing purchases while the crisis in Cyprus flared. After a dismal 2012, analysts warned that several car firms could struggle to survive 2013 with further declines in sales threatening more losses.
Across a broad range of manufacturing, the picture was equally bleak, especially in France. French factory activity retreated for a 13th month and car registrations dived 16.4% in March, further underlining the malaise sweeping through the eurozone's second-biggest economy.
Capital Economics said: "Combined with today's record-high unemployment figures, the survey confirms that the euro-zone is mired in recession. What's more, there is no reason to expect things to turn around any time soon."
Even Switzerland, which has proved a haven from much of the euro crisis, suffered a sharp decline in manufacturing.
The landlocked country is notorious for its secretive banking industry, but less well known is its reliance on manufacturing for almost a third of GDP. However, the high value of the Swiss franc has increased the price of the sector's exports and, combined with the decline in demand from eurozone countires, triggered a fall in sales.
In Britain manufacturing output dropped at the fastest pace since October 2012 but the prospects for new business brightened slightly.
New export orders weakened for the 15th successive month amid reports of stiff competition from the US and Asia and poor demand from Europe.
CIPS/Markit said there had been modest job losses in industry last month, concentrated in bigger companies. But the survey warned that cost pressures on manufacturing were increasing as a result of dearer electricity, oil and food products.
Figures from the European statistics office Eurostat showed that the overall unemployment rate in the 17-member currency union has risen steeply since February last year, when the rate was 10.9%.
Across the EU as a whole, there are now 26.3m people out of work, pushing the jobless rate to 10.9%, up from 10.2% in the same month last year.
Britain, which had until recently succeeded in cutting unemployment, joined a list of 19 EU member states that suffered a rise in February. Only eight countries experienced a fall in unemployment.
Despite operating against a backdrop of rising unemployment and falling inflation, the European Central Bank president, Mario Draghi, has so far resisted easing monetary policy in a similar vein to the Bank of England and the US Federal Reserve, which have pumped vast sums into their respective economies under the policy of quantitative easing (QE).
The ECB meets on Thursday to consider cutting interest rates to boost growth, but it is expected to maintain the current 0.75% base rate and reject pleas to adopt QE.
Andrea Broughton, principal research fellow at the Institute for Employment Studies, said Brussels risked creating a "lost generation" of young people who have left school or college only to join the dole queue.
She said: "Youth unemployment remains the EU's biggest employment-related headache, and shows no signs of abating, with an average rate for the under-25s of 23.5% in the 27 EU member states. In Greece, the youth unemployment rate is nearing 60% – a rate of 58.4% was recorded in December 2012. In Spain, the youth unemployment figure is 55.7%."
Brussels launched a youth guarantee this year that urged member states to ensure all young people receive an offer of work, continued education, an apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed.