A majority of senior financial professionals surveyed believe that the Eurozone will not retain its current structure in the future, and that a “two-speed” currency bloc will replace the current one, according to MNI’s Eurozone Barometer.
Among 168 respondents from 21 countries worldwide, 43% predicted that a two-speed euro area would emerge in the future, with countries like Germany, France and the Netherlands choosing to integrate deeper and share more sovereignty gradually over time and underachievers such as Portugal, Italy, Ireland, Greece and Spain remaining inside a second-tier, more fragmented economic group.
“Under this scenario, a core group of countries would bind more closely together to pool sovereignty, especially around fiscal policy, while a second group of countries would step back from deeper integration,” according to the Barometer, which was conducted in August and September.
A total of 35% of respondents said they disagreed with the premise of a two-speed Europe, while 11% were undecided. [...]
Taken as a whole, the findings appear to back the view of many economists who believe that the Eurozone cannot function indefinitely as a sub-optimal union based only on monetary union and some economic cooperation, and that it will eventually break without the core members moving to a single budget policy and one Treasury. [...]
More than half (54%) of respondents said they doubted countries in the euro area would ever be able to move to a full fiscal union.
As one German respondent pointed out in the survey: “Germany will support [fiscal union] only when seeing reform commitments and significant transfer of competences on the EU level.”
Safe haven
The MNI Eurozone Barometer found that the majority of respondents feel that shock waves from the financial crisis continue to dampen investment confidence in the region. Seventy five percent agreed that “the ongoing Eurozone drama is undermining financial market confidence”. [...]
Brexit
MNI’s Eurozone Barometer also found that respondents' were distinctly positive on whether Britain opting to stay in the European Union after its referendum to be held by 2017. Although a majority of those surveyed were in favour of Britain remaining a member of the Union, there was widespread agreement that the pound should not be abandoned in favour the euro.
When asked their preference of whether Britain should stay in the EU or not, 71% of all respondents thought it was a good idea to remain inside.
“Views inside and outside the UK were largely congruent, indicating that the financial markets see this question not from a nationalist, but from a less passionate market point of view,” the Barometer said.
Those opposed to staying in the European Union still emphasised that Britain must remain party to existing and new trading agreements, so that it could have the best of both worlds -- no financial obligations, but all the trade opportunities of EU members.
Full article in MNI Deutsche Börse Group
© MNI Deutsche Börse Group
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