Spending cuts 'will lead eurozone back to recession'

10 April 2012

Spending cuts in Spain and Italy are set to lead the eurozone back into a period of recession in the near future.

That is according to leading foreign exchange forecaster Nick Bennenbroek, head of currency strategy at Wells Fargo & Co, who told Bloomberg the region's financial crisis could re-emerge.

Mr Bennenbroek explained the euro is likely to fall in worth as the governments of embattled member states implement further austerity measures in an attempt to improve their economic situations.

Indeed, the expert - who has been the most accurate predictor of currency value in four of the last six quarters measured by the news source - believes the single currency could drop by more than five per cent against the dollar before the end of 2012.

This comes after European Central Bank data showed that banks across the continent would have fallen well short of the upcoming Basel III rules had they been in force last year.

By Gary Cooper

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