20% of economists predict eurozone break-up
Nearly all predict a return to recession in 2012
A majority of economists put the possibility of a eurozone break-up at 30-40 per cent in 2012, according to the results of a BBC poll - and 20 per cent even state the eurozone will not exist in its current 17-member form next year.
Nearly all of those polled predicted that Europe would return to recession in the new year as the continent struggles to get to grips with its debt crisis.
Most economists surveyed also expect UK interest rates to remain at historic lows of 0.5 per cent throughout 2012 – the same level it has been since March 2009.
European woe: Leading economists are expecting Europe to head into a recession next year
The poll questioned 34 UK and European economists who advise the Bank of England on a regular basis, and of the 27 who responded, 25 predicted recession for Europe next year - a damning verdict by the experts on the future of European economy.
The views of Europe among investors are slightly more divided. In the Bank of America Merrill Lynch Fund Manager Survey, global investors were split over the future of the euro and question whether the eurozone can remain intact.
Nearly half of the panel - 48 per cent - believe that no member state will exit the euro in 2012 or the foreseeable future.
However, 24 per cent of the panel expect one of the 17 member states to leave the euro in the first half of 2012. In total, 45 per cent expect a member to depart in the foreseeable future, with 7 per cent undecided.
European markets have been hit hard in 2011 due to the looming uncertainty across the continent. Germany's benchmark index the DAX and France's CAC-40 have both fallen 15 per cent this year.
The FTSE 100 has fared better than its European counterparts, with the index set to finish roughly 7 per cent down on last year when it closes later today.
And it is not just European markets that have been burnt by the crisis. For instance, the Nikkei in Japan, has fallen 17 per cent – partly due to the eurozone problems, and partly due to the earthquake in March.
The pessimistic views on the outlook for Europe next year comes as growth has slowed in recent months, with the crisis forcing governments to curb spending and in turn, knocking confidence in global financial markets.
The eurozone economy grew only slightly in July and September by 0.2 per cent and the 27 economies of the EU grew collectively by 0.3 per cent.
And with the debt crisis carrying through into the New Year, many leading experts are convinced that Europe will return to a recession.
European debt crisis a 'significant threat' to the UK
The ongoing debt crisis in Europe will also have a detrimental impact to the British economy, according to the Confederation of British Industry (CBI) director general John Cridland.
He has warned that continuing weakness in the eurozone still posed a ‘significant threat’ to the UK as around half of exports go to Europe.
He said: ‘The faltering recovery with family and business budgets under pressure and the on-going crisis in the eurozone are stark reminders of the need to rebalance our economy away from household and government debt.’
However, German finance minister Wolfgang Schaeuble has hit back at the negativity surrounding the eurozone in an interview with German newspaper Handelsblatt.
He says that eurozone problems will be solved and he’s confident that Europe’s politicians will manage to stablise the crisis in 2012, to keep the euro together.
Whatever does happen, it is sure to be an interesting 2012 for Europe - will it be able to save the euro, pull together, survive, and prosper?
Read more:
http://www.thisismoney.co.uk/money/markets/article-2080188/Economists-estimate-30-40-chance-break-euro-2012.html#ixzz1i5B0pAq0
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