TWO thirds of business leaders and finance directors expect the euro to slide in the coming year as concerns over sovereign debt refuse to dissipate, according to a survey.
More than 66 per cent of company executives interviewed by the Economist Intelligence Unit for investment bank RBC Capital Markets thought the single currency would continue to weaken. Many expressed fears over a break-up of the Eurozone, with Greece considered the most likely country to exit, followed by Portugal, Spain and Ireland.
The responses reflect uncertainty over periphery Eurozone nations’ ability to finance themselves and gradually rein in their towering budget deficits. Athens is struggling with a shortfall of 13.6 per cent of GDP, more than four times the European Union limit. The Eurozone and International Monetary Fund were in?May forced to agree a €110bn (£90bn) support package for Greece should the government be unable to tap debt markets in the normal way.
The majority of 440 people questioned by RBC said the dollar would remain the reserve currency of choice given the lack of viable alternatives, with some believing the Chinese renminbi would squeeze out the euro as the greenback’s main competitor.
Richard Talbot of RBC said the problem of rising national debt in the developed world was complemented by the growing economic gulf between the west and east. “The downside of growing sovereign debt and pressure on currencies such as the euro is clear,” he said.