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Financial professionals believe that the Eurozone will not retain its current structure in future - and is likely to evolve into a two-tier club - while the UK should remain a member of the European Union. At the same time, the Eurozone crisis has undermined financial markets’ confidence in the region and participants are demanding greater transparency of the EU policy-making process.
These findings come from the inaugural MNI Eurozone Barometer, a survey conducted by Market News International (MNI). MNI is a leading provider of news and intelligence for the global foreign exchange, fixed income and commodities markets and part of Deutsche Börse Group. The research conducted by MNI’s Euro Insight intelligence service for economic and financial policy in Europe questioned about 170 senior financial professionals.
“In the context of the current market volatility related to uncertainty of Chinese growth and U.S. interest rates, the Eurozone is now perceived as something of a safe haven among investors”, said Matthew Saltmarsh, senior Euro Insight analyst at MNI, commenting on the survey. “However, institutional investors believe that a two-tier Europe is the most likely way forward, rather than full fiscal integration.”
Among the three most important findings from this survey was that most doubt the Eurozone will ever achieve a full fiscal union. According to the survey, 43% thought that a "two-speed" euro area was likely to emerge in the future; 35% disagreed with the premise and 22% were undecided. 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.
Secondly, a clear majority prefers the status quo with regard to UK and the EU, saying the UK will and should stay in EU, but avoid euro assimilation. With the question of a possible British exit from the EU moving up the agenda before the referendum on the question, due by 2017, a clear majority (72%) said it was very likely, likely or somewhat likely that London would still be inside the Union in 2020. Only 14% of respondents thought that the UK should sever ties with Brussels and only 8% thought the country should abandon the pound for the euro.
The third major finding was that investors expect that the euro will continue to exist in its current form. 59% of financial professionals felt that despite the recent upheavals, the euro would still exist in its current form in 2020; against 18%, who said it was unlikely or very unlikely. Download the full MNI Eurozone Barometer Report here:
The survey was conducted during August and September 2015 via an email survey of MNI‘s Foreign Exchange and Fixed Income buy-side and sell-side communities, asking a series of questions focused on the likelihood of and possible financial market reactions to various Eurozone crisis scenarios. The results were analysed by MNI’s Euro Insight team, which provides insight and behind the scenes analysis of Brussels’ opaque policy-making processes. MNI Euro Insight is a subscription-based service and can be accessed here:
Market News International (MNI) is a leading provider of news and intelligence for the global foreign exchange, fixed income and commodities markets and part of Deutsche Börse Group, a wholly owned subsidiary of Deutsche Börse AG, one of the largest worldwide exchange organisations.