Hamish Douglass (Magellan) expresses extreme skepticism that the Eurozone is on the verge of a meaningful and sustained recovery

Hamish Douglass (Magellan) expresses extreme skepticism that the Eurozone is on the verge of a meaningful and sustained recovery. These are some of the inhibiting factors The Eurozone banking system remains under-capitalised. In the absence of Government-led recapitalisations, the most realistic way to recapitalise banks is via further balance sheet deleveraging. Notwithstanding recent announcements, there is a long way to go to establish a comprehensive European Banking Union. Portugal, Ireland, Italy, Spain, Greece and France remain fiscally stretched, with high levels of government debt and ongoing budget deficits. Unemployment remains above 10% in Ireland, Italy and France, above 15% in Portugal and above 25% in Greece and Spain. Weak price growth and falling inflation expectations have increased the risk of deflation. This could be a major problem for certain Eurozone economies that are reliant on nominal GDP growth and inflation to reduce their very large debt burdens. Full report (VIEW LINK)