The 17-nation euro area is on the verge of losing one of its members, with more than 50 percent of investors predicting an exit this year as Greece’s election impasse threatens to push the debt crisis to new depths, according to the Bloomberg Global Poll.
As Greece faces political paralysis and voters balk at austerity, 57 percent of the 1,253 investors, analysts and traders who are Bloomberg subscribers said at least one country will abandon the euro by year-end and 80 percent expected more pain for Europe’s bond markets. With a majority identifying a deterioration in Europe as a large threat to the world economy, respondents to the May 8 survey were increasingly worried Spain will default and less willing to buy French debt as Francois Hollande takes power.
The number of poll participants who predicted a smaller euro area within a year ballooned to 57 percent from 11 percent in January 2011. The 80 percent saying evidence Europe is stabilizing is temporary and that the market will be roiled again also marks a jump from about two-thirds who held that position at the start of this year.
In a sign of contagion, 47 percent said Spain is likely to default, the most since the survey started measuring this in June 2010 and almost double the tally of four months ago, as investors question whether Prime Minister Mariano Rajoy can tackle both climbing debt and the region’s highest jobless rate. Sixty-three percent bet Portugal will fail to pay its bills, although only about a quarter anticipated the same fate for Italy and Ireland. Just one percent said Germany will go bankrupt.