Europe has a 70% chance of plunging into recession, according to renowned economist and bond market expert Mohamed El-Erian, with Britain, Italy and Germany “paralysed” by domestic issues that have stalled the economies of the EU’s most powerful nations.
In an exclusive interview with Financial News, the chief economic adviser to Allianz, the German insurer, warned Europe is “quickly losing momentum”, leaving the trading bloc “teetering on the edge of a significant slump”.
The former co-chief investment officer at Pimco, the bond powerhouse, said the likelihood of a recession hitting Europe has jumped to 70%, with Brexit continuing to debilitate British politics and the German economy, the world’s fourth largest, shrinking by 0.1% in the three months to June.
Italy’s gross domestic product has also flatlined amid a political crisis and calls for a snap election.“The five major economies in Europe are all distracted by their own problems,” said El-Erian, who also referenced issues in France and Spain. “Virtually nothing is getting done. No pro-growth policies are emerging from these countries.”
Via Financial News – London