May 18
Friday links: companies still complacent to Euro breakup risks
As bank deposits leave Greece for France and Germany, is it too late for businesses to manage or reduce their exposure to a Euro breakup?
EIU survey reveals a lack of preparation for a Euro breakup – particularly Western European companies
A recent survey by the Economist Intelligence Unit of more than 1600 business executives around the world reveals some surprising insights into perspectives on the possibility of a Euro breakup and companies preparations for such an eventuality.
Taking all the businesses surveyed over three quarters said that they had some kind of contingency plan in place for the breakup of the Eurozone.
Surprisingly it is the large multinationals which appear to have put less attention into planning. Looking at those respondents with a turnover of £10bn or more, only half had a plan in place. This may of course reflect the sample size!
In terms of regions, perhaps unsurprisingly over 90% of respondents based in Eastern Europe have a contingency plan in place. However the poorest performers are Western Europe (75%) and Asia-Pacific (73.1%).
FT-Economist Business Barometer: May 2012
Where should business start in assessing their Euro breakup exposure?
- Euro Breakup: Is Business Too Complacent?
- Businesses brace for Greek exit
- Potential break-up of the Eurozone: overview of tax implications
May 13
Euro Breakup – Drachma by end 2012?
Despite reports that a number of Britain’s biggest bookmakers had stopped taking bets on ‘Grexit’ there are still a number of markets available from other bookmakers (Paddypower and Stan James) and through betting exchanges (InTrade).
The first observation is that the markets are defined in very different ways and so comparing odds between bookmakers/exchanges is a bit like comparing apples and pears. Announcing an intention to leave is very different to actually leaving, let alone introducing a new (or old!) currency!
Greek currency on 31 December 2012?
Euro 4/7
Drachma 11/10
Any Euro country announcing intention to drop Euro before…
End 2012 3/2
End 2013 Evens
End 2014 1/2
Eurozone to breakup by 2015?
Yes 1/5
Germany is the third favourite to be the first country to leave the Euro at 12/1. Angela Merkel’s election defeat on Sunday (13 May) taking place in North Rhine-Westphalia (Germany’s most populous state) is likely to lead to increased pressure on the current policy of austerity. However, its a stretch to see a complete collapse in German political support that would result in it leaving the Euro any time soon.
First country to leave the Euro?
Greece 1/4
Spain 7/1
Germany 12/1
Italy 12/1
France 14/1
Ireland 14/1
Portugal 14/1
Finland 18/1
Austria 22/1
Cyprus 22/1
Belgium 25/1
May 07
Euro exit probability rises above 50% following Greek election
The probability of a country announcing its intention of leaving the Euro before the end of 2014 spiked upwards following the Greek election rising to 56%, the highest probability since early 2012 (see Intrade market here).
Citigroup estimate the probability of a Greek exit from the Euro at between 50%-75% over the next 12-18 months.
As Ed Conway tweets, Greek share prices have plunged to the same level that Merkozy suggest a country might leave the Euro.
The plunge in Greek share prices this morning. Down to lowest level since Merkozy suggested country might leave euro twitter.com/EdConwaySky/st…
— Ed Conway (@EdConwaySky) May 7, 2012
