Nevertheless, of the respondents, 42 per cent expect that the stability mechanisms within the eurozone will most likely be further strengthened in the future while 25 view the introduction of euro bonds as the most likely modification. The introduction of a joint fiscal regime for the eurozone, which is often cited as a prerequisite for the sustainability of the euro, is not seen as likely in the near future with only 11 per cent of the respondents seeing this as the most likely outcome.
European investors sanguine about future of the euro
Following the findings, Andreas Utermann, Chief Investment Officer at RCM, a company of Allianz Global Investors, said:
"A break-up of the euro seems unlikely as the cost would be prohibitive and we believe that the efforts by the eurozone's politicians are gaining momentum. While it is still not clear whether the haircut on Greek debt will go beyond July's proposal of private sector participation of roughly 20 per cent, it seems unlikely that Greece will exit the eurozone. Nevertheless, we must recognize the impact of political risk on the current capital markets environment."
Many euro-sceptics expect a split of the eurozone to happen, but this scenario is also viewed as likely by a number of euro advocates. UK investors are the most sceptical with 41 per cent of respondents doubtful that the euro will survive in its current form, with a number explicitly stating that they expect Greece to default and exit the monetary union. By contrast, the vast majority of respondents in Germany and France, and all respondents in Italy, believe that the euro will endure these current challenges.
Andreas Utermann added:
"Scepticism from the UK about the euro is nothing new. However, there is a growing appreciation that, despite being outside the single currency, the UK economy derives significant benefit from a stable euro due to its strong economic and financial relationships with the eurozone. Recent statements by the UK's Prime Minister urging his eurozone counterparts to take significant action attest to this."
The Allianz Global Investors survey polled 140 institutional investors across 11 European countries1 during September 2011. Collectively, these investors represent more than 900 billion euros in assets under management or assets under advice.
1 The survey was conducted in Austria, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Sweden, Switzerland and the UK.
Andreas Utermann: "A break-up of the euro seems unlikely as the cost would be prohibitive and we believe that the efforts by the eurozone's politicians are gaining momentum"
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