25/10/2011
By Adam Cadle
New research has revealed that 83% of senior executives representing UK corporates doubt the sufficiency of the European Financial Stability Facility (EFSF) in securing confidence in Eurozone debt markets.
The EFSF was created by the euro area member states in order to safeguard financial stability in Europe by providing financial aid such as loans to countries in financial difficulties and also to intervene in the debt of primary and secondary markets. A survey conducted amongst 50 senior executives from a range of UK businesses on 19th October showed that 93% of executives are concerned as to what effects the Eurozone crisis will have on their firms.
To combat current volatility in the Eurozone, 38% of executives intend to grow their business over the next year by expanding into new markets with a further 24% having already implemented a hedging strategy to protect themselves.
Former executive chairman of the Financial Services Authority (FSA) Howard Davies said: “I remain pessimistic about the Eurozone’s ability to produce a comprehensive solution to the crisis that everyone is hoping for. We should not let the current focus on the EFSF detract from the need to ensure that Eurozone banks remain sufficiently capitalised.
“If Greece can be isolated from the rest of the Eurozone, the implications for UK companies and the wider economy should not be as damaging as some are predicting. Without ring-fencing Italy and Spain, the results would be catastrophic.”
Chief economist for Investec Phil Shaw stressed the importance for European leaders to act “quickly and decisively” in order to ease the risk of another recession.
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