Europe should be prepared for cuts: Signature’s Morris

Mr Morris, managing director of the discretionary investment arm of stockbroker Rowan Dartington, said the eurozone was “facing a decade of belt tightening” as European leaders sought to get a grip on the region’s debt burden.

He warned: “Life within Europe could become even less harmonious – the first round of cuts will be far from the last.”

Mr Morris added the “divergence in fortunes” between the US and European economies has been highlighted in the start of 2012.

He pointed to “sparkling” employment figures from the US in January, which were the best level of job creation in nine months and the lowest level of unemployment in three years, at 8.3 per cent.

But he said: “Growth in the eurozone remains mired with unemployment and dole queues are at their highest since the inception of the euro. As the war of words continues, Greece still looks like a basket case in need of radical change.

“Regrettably, with Greek elections potentially scheduled this month, there is little incentive for politicians to endorse asking for more recession than the country can take.”

But Mr Morris said Greece was not the only problem area, as countries continued to support “excessively generous” social security programmes which needed to be reduced.

The director warned upcoming French elections would test the markets further, with current front runner, François Hollande, proposing to expand the public sector and reverse pension reforms put in place under Nicolas Sarkozy.