NEW YORK , Dec. 5, 2012 /PRNewswire/ -- The US and European economies will face significant challenges in 2013 and beyond regardless of the scope and direction of imminent fiscal decisions globally, according to a new BNY Mellon-sponsored report from the Economist Intelligence Unit (EIU). The report, Fiscal Decision Time for Political Leaders, examines and details the diverse opinions of leading market watchers and participants. The report's key findings include:
- Experts are divided on whether government leaders will make the tough fiscal decisions necessary to save their economies. In spite of widespread pessimism, some experts believe US leaders could come up with a "grand compromise" and European leaders could move toward greater fiscal and regulatory union.
- Viewing the US "fiscal cliff" as a binary event distorts what's likely to happen. Although the equity markets would likely rebound if lawmakers achieved structural reform, experts agree that the US is likely to experience a fiscal drag in any case.
- The European economy faces two major uncertainties: Will European countries ever submit themselves to outside fiscal control? Will the European Central Bank cut off an ailing country from further support if it fails to meet conditions for its loans, thus triggering the type of panic it seeks to avoid?