Most global investors predict that at least one nation will abandon the euro zone within five years and that Greece and Ireland will default, according to a Bloomberg’s poll.
The sentiment that is intensifying pressure on policy makers to strengthen their response to the debt crisis, says the news agency.
Moreover, 59% of respondents in a global poll said one or more of the 17 euro member nations will quit by 2016, while 11% foresee an exit within 12 months.
Respondents were divided over whether Portugal would default, while a majority expressed confidence in Spain, according to Bloomberg.
Such pessimism underlines the urgency German Chancellor Angela Merkel and French President Nicolas Sarkozy face to find new ways to ease investors after almost $1 trillion in emergency financial support failed to calm markets.
“The problems in Europe have been addressed, but only with a band aid,” said Ted Jarvis, senior vice president at the Indiana Trust Company. “Several euro members have not followed the correct policies and dug themselves a deep hole.”
Respondents in the poll completed this week of 1,000 investors, analysts or traders who are Bloomberg customers were almost evenly divided about whether the euro area will eventually collapse, according to the news agency.
Most of the 45% who anticipated a breakdown said it wouldn’t occur in the next five years; 48% said it would never happen.
“It’s very difficult to imagine a scenario in which the euro would break up,” said Kenneth Broux, a senior market economist at Lloyds TSB Corporate Markets. “The political investment in the project is way too high and Europe’s debt market is now the biggest in the world.”
“Nobody mentions that all these debt bailouts are funded with additional debt,” said Kevin Baldauf, a portfolio manager at Wafra Investment Advisory Group Inc., who views Greece as likely to default. “You can’t solve a debt problem with additional debt. It buys you time, but hurts you in the medium to long run.”
According other investors, more likely than a breakup and more urgent is the need for some countries to restructure their debts as it is going to happen sooner rather than later, says Bloomberg.
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