Europe Economy

Two Thirds Chance of 2012 Europe Recession: Survey

Europe is likely to slip into another recession in 2012 while the United States and China will escape a double-dip, according to the majority of investors polled by Barclays in a new survey.

Their pessimism about Europe stems from the debt crisis plaguing the region, with nearly 40 percent of investors citing it as the key theme for markets in 2012.

Just three percent of respondents believed the United States and China could slide into recession without Europe, evidence that they expect developments outside Europe to be more promising.

Only 10 percent of currency investors expect US fiscal issues to be a key theme for financial markets while more than 60 percent of stock investors and close to 70 percent of currency investors expect contagion from the European crisis to matter most for equity markets over the next three months, Barclays found.

U.S lawmakers halted their efforts to cut the country’s deficit after it proved impossible to reach a bipartisan agreement.

While the news hit shares on Wall Street, concerns over the euro zone debt crisis remained at the forefront.

Elections and politics in the advanced economies are likely to be key in Europe, according to 22 percent of respondents, reflecting concerns about the ability of policy makers to tackle the fiscal challenges ahead.

Almost 50 percent of respondents expected at least one country to leave the euro area in 2012, while 35 percent of investors expected the breakup to be limited to Greece., One in 20 expected all five "peripheral" economies to exit next year.