Europe’s rising sovereign debt problems remain the chief concern of the world’s business leaders, according to a RBC Capital markets survey released Monday morning.
Almost half of the 440 senior executives surveyed from around the globe believe there is a better than 50% chance that one or more countries will leave the eurozone in the next three years. While 36% of those surveyed see at least a 25% chance of a complete breakup of the eurozone over the same period.
Some experts believe heavily indebted governments will seek new capital to pay for aging populations and deteriorating infrastructure in the coming years, while banks look to rebuild balance sheets and corporations try to finance day-to-day needs. That means increasingly stiff competition for new money.
Marc Harris, co-head of global research at RBC, said: “Competition for capital will no doubt become more acute for corporates and sovereigns, and the next few years will continue to present a challenging environment.”
Although the chances of a G-20 economy defaulting on its debt remain low, one third of respondents believe there’s a 50% chance or better that it could happen. Two-thirds of executives believe the value of the euro will continue to decline over the next year, and that means the dollar will be reinforced as a the reserve currency for the near future.
G-20 leaders committed in Toronto this weekend to halve their deficits by 2013.