Austerity splits European views on economic outlook

Investors from countries with the lowest needs for fiscal austerity are the most optimistic about their own country's economic outlook and also the global economic outlook for 2011, research reveals.

A Schroders survey of 2,200 high net worth investors across ten European countries shows that investors in Italy, Spain, UK and France, which have some of the highest fiscal austerity needs across Europe, are the least optimistic about the domestic and global economic outlook in 2011.
 
However, they become more aligned with the rest of Europe on the domestic and global outlook over five and ten years, the survey found.

In contrast, investors in Sweden, Switzerland and Germany, which have some of Europe's lowest fiscal austerity needs, are the most optimistic about the outlook of their domestic economies as well as the global economy this year.
In the UK 11% are optimistic about the country’s economic outlook and 14% are optimistic about the global outlook. The picture in Spain is similar with 11% and 12%. Italy has 15% optimistic about the domestic future and 26% positive about the global outlook. While France had 17% and 23%.

In Germany over half, 53% are optimistic about the country’s economic outlook, and less, 49% about the global outlook. Switzerland has 54% positive about the domestic outlook, but much less optimism about the global picture at 37%. Sweden has the most positive outlook domestically at 59%, but this drops to 45% for the global picture.

The survey also revealed that Europe's view on the economic outlook for the Eurozone becomes less aligned over time and that the level of fiscal austerity needs does not necessarily determine the outlook.
 
While Europe is broadly aligned for 2011, Spain, Italy and Belgium are the most optimistic and the UK and Switzerland are the most pessimistic over five years and ten years.

‘The results from the survey show that confidence is very low and that there is a clear relationship between confidence in investors' domestic market and the global economy,’ said Azad Zangana, European economist at Schroders.

‘Investor optimism appears to be lowest in countries that have the greatest need for fiscal austerity, such as Spain and the UK, and this appears to strongly influence their global outlook.  There is however growing confidence amongst European investors and despite the risks of Greece restructuring its sovereign debt, investors remain positive over the longer term,’ added Zangana.