Quelle surprise! The number of companies going bust in Europe is expected to escalate with the financial crisis.
The Financial Times says European corporate defaults are widely expected to climb sharply this year. "Analysts have markedly increased their 2012 default forecasts for European companies rated below investment grade, or junk, and some restructuring advisers warn the pain could rise close to levels seen at the nadir of the financial crisis. European banks are under immense pressure to raise capital or shrink their loan books to meet new regulations with most choosing the latter course."
Standard & Poor's says that the uncertainties about sovereign debt as well as scarce and expensive debt financing could see the European corporate default rate soaring above 6% this year. "We see a 40% chance of a deeper recession materializing and anticipate that monetary policy in Europe will stay unconventional and highly stimulative until 2013 at least, to mitigate the ongoing fiscal consolidation efforts by Eurozone governments and boost credit support for banks and households."
As reported here, the Fed chairman Ben Bernanke says that parts of the European Union are "certainly" in recession. While it still remains unclear whether the entire economic union will slip into negative economic growth, it's an open question as to how bad it will get and how long it will last.
But the uncertainty means it will tough running any business in Europe and if there are enough defaults, that will certainly drive the region into recession.
no comment untill now