Economic outlook: Pressure on central banks Given the rapid deterioration in confidence and business activity surveys in May, there will be added pressure for policy makers at the European Central Bank and the Bank of England to act at this week's monetary policy meetings. Germany has hitherto provided a haven to investors in Europe with its government bonds, sending yields on some of its shorter-term debt negative. At the same time, the yields of periphery debt have continued to rise, and Spanish benchmark yields are climbing toward levels that prompted bailouts in Greece, Ireland and Portugal. Ifo and ZEW surveys of German business and economic sentiment are weakening, reflecting the growing concern that the country's erstwhile resilience to the debt crisis is wilting. Policy makers are facing a hard challenge to turn the need-for-growth talks into real measures. If they fail to do so or are too late, expect the doom spiral to accelerate," says Stefan Angele, at Swiss & Global Asset Management. Pressure is therefore on the ECB to cut its main rate below the current 1 per cent as risks to inflation remain "broadly balanced" and the economic outlook is still "subject to downside risks." The governing council will be informed ahead of Wednesday's decision by purchasing managers" surveys of the services sectors tomorrow, and by revisions to first-quarter eurozone gross domestic product, published a few hours ahead of the ECB meeting. Flash readings of the eurozone services PMI suggested activity in the sector moved further into contraction in May. The 46.5 level - down from 46.9 in April - is expected to be confirmed. Growth in the eurozone, meanwhile, is expected to be confirmed at zero after the initial estimate showed slowing machinery and equipment investment. The BoE's policy meeting follows on Thursday and, with the eurozone crisis hanging heavily on financial markets, action from the MPC would come as no surprise. MPC members will be similarly informed by PMI services data, published a few hours ahead of the midday meeting, which are expected to show slowing activity. But crucially, the purchasing managers" index is expected to fall just a few points, from 53.3 in April to 52.8. Any reading above 50 indicates expanding business activity. Last month's downward revision to first-quarter GDP was a disappointment though, and manufacturing activity, as measured by purchasing managers, fell to a three-year low in May. "The MPC may well be persuaded that the need to boost growth should take precedent over any worries about inflation, and vote to expand the bank's current £325bn asset purchase programme," says Chris Williamson at Markit. Australia's Reserve Bank also makes what is expected to be a close call tomorrow. Having cut by 50 basis points to 3.75 per cent last month, most analysts believe it will hold at this level this month. Inflation remains low, however, and there is room for more cuts. Purchasing managers in the US deliver their assessment of activity in the services sector tomorrow. Having fallen to 53.5 in April, expectations are for a slight improvement in May to 54. The Federal Reserve's Beige Book survey, based on business conditions compiled by the 12 district Fed banks, is published on Thursday. Since the last report in April, PMI surveys have deteriorated a little.