Will the euro cease to exist?

Dr Joel Rogers de WaalAcademic Director, YouGov
March 22, 2012, 12:00 PM UTC

As concerns rise over the Eurozone fiscal treaty, Joel Faulkner Rogers and Stefan Kaszubowski consider the results from YouGov’s latest poll of 68 finance professionals including Hedge Fund Managers, Investment Bank Traders, Analysts, Investment Bankers and Investment Fund Managers.

Over the long-term, a significant minority believe the single currency will cease to exist. However, on a 12 month horizon, the vast majority say the euro will survive. The currency does not come out unscathed – most think the euro will fall in value against Sterling over this period.

Regarding the bailout of Greece, 55 of the 68 say they think it unlikely that the plan agreed by EU Finance Ministers on 20th February 2012 will achieve its stated goal.  It is therefore, not surprising that when thinking about the short to medium term, almost half say one or more debtor countries is likely to leave and 12 say a breakup such that the euro ceases to exist is most likely.

Headline results

  • Around 1 in 3 finance professionals interviewed by YouGov, indicate they believe the euro will cease to exist in 10 years. Of those who believe it will continue to exist, 22 indicate a gain in value against Sterling and 25 indicate a fall in value against Sterling.
  • A majority of finance professionals (64 out of 68) indicate they believe the euro will continue to exist in the short term although most (51 out of 64) believe it will fall in value against Sterling in 12 months.

Future value: 10 years

YouGov asked 68 finance professionals – including Hedge Fund Managers, Investment Bank Traders, Analysts, Investment Bankers and Investment Fund Managers – to forecast the value of the euro relative to Sterling in 10 years: across the group of 68 the median value is 0.8 with a minimum predicted value of 0.5 and a maximum predicted value of 1.50. However, 21 professionals say they do not believe the single currency will exist in a decade.

Future value: 12 months

YouGov also asked about the value of the euro relative to Sterling in 12 months (from a current position of around 0.85): across the group of 68 the median value is 0.8 with a minimum predicted value of 0.43 and a maximum predicted value of 1.00. The mean value is 0.79. 4 out of the 68 professionals say they do not believe the single currency will exist in 12 months.

Future scenarios: short to medium term

  • When thinking in the short to medium term about the most likely future scenario for the Eurozone, 56 of the 68 professionals select scenarios that preclude the demise of the single currency.
  • A minority (23 of 68) believe the most likely outcome is one that precludes a breakup or countries leaving.
  • A majority (41 of 68) indicate the best outcome for creditor countries would be breakup or debtor countries leaving the Eurozone.
  • Half (34 of 68) indicate the best outcome for debtor countries would be breakup or debtor countries leaving the Eurozone.

Most likely scenario

  • Although on a 10 year horizon 1 in 3 indicate the euro will no longer exist, when thinking in the short to medium term almost half of the 68 finance professionals select ‘one or more debtor countries will exit the Eurozone but the euro will continue to exist’.
  • 19 of the professionals said ‘no countries will exit but major reforms will be made, leading to greater economic and political integration of the EU’.
  • 4 said ‘no countries will exit and the Eurozone will survive the crisis largely as it is now’.
  • 12 of the 68 professionals said they believed there will be ‘a breakup of the Eurozone such that the euro ceases to exist’.

Best scenario for Eurozone creditor countries

15 indicate a ‘breakup’ of the Eurozone and a further 26 indicate ‘one or more debtor countries leaving the Eurozone’ is the best long-term economic outcome for Eurozone creditor countries.

Best scenario for Eurozone debtor countries

11 indicate a ‘breakup’ of the Eurozone and a further 23 indicate ‘one or more debtor countries leaving the Eurozone’ is the best long-term economic outcome for Eurozone debtor countries.