European countries undergoing austerity measures are more likely to suffer low consumer confidence which leads to poor equity returns, according to a report from Schroders.
The survey of 2,200 high-net-worth investors in ten European countries found that Italy, Spain, UK and France, which are expecting some of the biggest cutbacks, are the least optimistic.
In contrast, Sweden, Switzerland and Germany, which have comparatively low austerity needs, are the most optimistic about their own and the global economy.
Schroders European economist Azad Zangana said: “When we see countries undergoing severe fiscal austerity, consumer confidence is hit and then investor sentiment is hit as a result.”
Investors in the high-austerity countries were more optimistic, and more closely aligned with the rest of Europe, when asked for their five to ten year outlook.
©2011 funds europe