Private investors predict Eurozone break-up

From: Lloyds TSB International
Published: Thu Jun 07 2012

A new study has revealed that many offshore private investors are being more cautious about their approach to the Eurozone, with talk of the European debt crisis and concerns around the general elections in France and Greece feeding fears about its stability.

Lloyds TSB International Wealth asked 1,033 wealthy private investors what they thought of the current European financial landscape; with 42 per cent responding by saying they predict a complete break-up of the Eurozone over the next five years.

This compares to the 37 per cent who said they have faith that in the Euro areas ability to endure, but sits alongside research that shows that 46 per cent of investors believe two or more countries will leave the Eurozone over the next 12 months – something only 27 per cent said they disagree with.

Governmental changes in Greece have also fuelled concerns around the future of Europe. For example, many are hopeful the country’s new administration will be able to deliver on the reforms detailed in the terms of its two bailouts. However, the 65 per cent of wealthy investors predict Greece will leave the Eurozone in the next year, compared to just 18 per cent who disagree.

With so much negative debate, it’s perhaps no surprise that just four per cent of those polled say they’ve increased the amount they are investing in the Eurozone over the last six months. A point Trevor Williams, Economics Adviser at Lloyds TSB International Wealth says is reflective of the lack of confidence in the Eurozone’s at this time.

"Five years and it’s not getting better, it’s arguably getting worse, even after repeated bailouts," he states. "This implies that the Eurozone must place more weight on growth-oriented policies and move closer to fiscal integration in order to address longer-term structural issues in its debt-ridden periphery. In the absence of such measures, it will be hard to avoid a situation where weaker members eventually leave the Euro area - a scenario that our investor survey considers as highly likely."

Philippe Schindler, Chief Investment Officer EMEA at Lloyds TSB International Wealth, added that there were exceptions like safer German government bonds and quality corporate bonds to consider, but that underperformance in the area elsewhere had investors worried. "Both institutional and private investors have been reducing their exposure to the Euro, acknowledging political uncertainty and positioning their investments for further difficulties," he concluded.

Lloyds TSB International Wealth provides a range of banking and investment services for wealthy clients around the world. The Bank provides financial guidance and a checklist to help people emigrate at:

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Notes to editors:
All figures, unless otherwise stated, are from YouGov Plc. 1,033 investors (UK adults) with over £250,000 of savings and investments, excluding property, were surveyed in March 2012. The survey was carried out online.

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Colleen Brayshaw, Grayling (on behalf of Lloyds TSB International Wealth)
Tel: +44 (0)20 7932 1872
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George Morrison, Grayling (on behalf of Lloyds TSB International Wealth)
Tel: +44 (0) 20 7592 7928
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Company: Lloyds TSB International
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