Analysis: Euro zone survival? Depends on where you work

Wed Jul 3, 2013 5:25am EDT
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By Andy Bruce

LONDON (Reuters) - Three years into an unresolved euro zone crisis, Reuters polls show a marked split on the future depending on whether forecasters are based inside or outside the currency bloc.

What sort of institution those who are regularly canvassed work for also appears to be a factor.

In last week's Reuters poll of bond market strategists and economists, the divisions were clear.

Asked if government borrowing costs for peripheral euro zone countries such as Spain and Italy would soon head back into the danger zone, only around a quarter of economists working for euro zone-based institutions answered yes.

For non-euro zone respondents, slightly more than half predicted a return to crisis levels in the bloc's debt markets.

It might not take long to find out who is right. Government borrowing costs have spiraled to dangerous levels in Portugal this week, racked by a political crisis that also pushed Spanish and Italian bond yields higher on Wednesday.

Greece is also facing a crisis again, with it being given only a few days by international lenders to deliver on conditions attached to its bailout in order to receive its next tranche of aid.

To some extent, all forecasters are subject to outside pressures - whether they are work for investment banks, governments betting on strong economic growth, or independent research houses seeking a splash with eye-catching predictions.   Continued...

A protester holds a placard during a rally in Trafalgar Square in central London May 1, 2013. REUTERS/Toby Melville