European member states will likely need to provide further financial support to debt-stricken Greece within the next three years as southern Europe tries to cope with further repayments to creditors, Virginie Maisonneuve, head of global and international equities at Schroders told CNBC on Monday.
Click here to watch the full interview with Virginie Maisonneuve
“We still are in a two-geared Europe where you have Germany, and to a certain extent some of the other countries like France, really benefiting from strength in emerging market demand…and then you have the southern belt, which is not out of its problems,” Maisonneuve said.
“We’re expecting that within three years we’ll need another package for Greece,” she added.
Greece was bailed out by other euro zone members and the International Monetary Fund in May in a move regarded necessary to guarantee the future of the euro.
Maisonneuve believes the developed world is moving towards a low-trend growth environment, while emerging markets continue to take market share. They will help to stabilize the financial system, she said.
“The role of southern Europe should diminish and therefore we should be able to get by, but I think that expecting other packages along the way is very realistic,” Maisonneuve said.
A recovery in the United States was dependent on renewed employment, she said, adding that more quantitative easing was likely if there were no clear signals that unemployment, currently at 9.6 percent, would fall.
A possible further Federal Reserve move to increase money supply was likely “between now and November” she said.
Although demand had come back, to a certain extent it had led mainly to the creation jobs outside the US, some analysts have said.
“I’m confident it will come back but it might need another push over the next few months,” she said.
The dollar was likely to weaken if the Federal Reserve opted for further quantitative easing, “which would actually be very good for America,” she added.
“When we had weakness of the dollar at the start of the crisis, the impact was really supportive for exports and that really helped GDP quite nicely,” Maisonneuve said.
