European fixed-income investors said that more fiscal measures are needed to solve the eurozone crisis, according to Fitch Ratings' just published, quarterly investor survey of asset managers' outlook for the credit markets.
Investor remain unconvinced by recent policy efforts and the majority (58%) of survey respondents think the while the Eurozone fiscal compact is positive it will be marginal in solving the crisis. Only 25% of investors participating in the survey regard it as an important policy innovation bringing crisis resolution closer and 17% view the recent policy efforts as irrelevant. The fiscal compact is an agreement, signed in March by all EU member states except Britain and the Czech Republic, that puts strict caps on government spending and borrowing in a bid to head off the sovereign debt crisis in the eurozone.
"In our view, the fiscal compact is an important step towards building confidence in fiscal discipline in the eurozone, but additional measures are indeed needed," said Fitch analysts. "These are likely to include some dilution of national fiscal sovereignty; potentially some partial mutualization of sovereign liabilities and resources; as well as measures to enhance pan-eurozone financial supervision and intervention, combined with further institutional reforms to strengthen eurozone economic governance."