Warning over Spanish austerity drive
Spain’s austerity measures may be counterproductive as the severe global growth outlook could derail the economy, say investors
However, Brian Hess, co-portfolio manager on the $998m (£647.1m) Legg Mason Brandywine Global Fixed Income fund, said talk of burden sharing with bondholders could “set off a panic and shut down what remaining finance is available to Spanish banks”.
He said an EU-wide banking authority, which was proposed at recent EU summits, would be a better way to share burdens.
“One of the things which would get us to invest more in Europe is if we could see the nasty linkage between the banking system and governments broken,” he said.