The CEO Poll: EU bailout of Ireland necessary

Canadian execs expect more financial rescues to come but question effectiveness.

Business leaders give the federal mini-budget high marks.

The recent European Union bailout of out Ireland has sparked a loud debate over the future of Eurozone economies. In a recent COMPAS Inc. poll, Canadian execs surveyed said that Europe was right to provide Ireland with the bailout, giving the action 5.1 on a 7-point scale, where 7 means strongly agree.

But the executives were divided on whether the bailout would succeed in stabilizing the EU. On a 100 point probability scale, the respondents gave the likelihood of Ireland failing to recover within a year and calling for a second bailout a 53. When asked if Spain will demand a bailout, the chief executives gave that possibility a 62.

Recently, German chancellor Angela Merkel declared that bondholders should share a stake in future government budget crises, which would pressure weak governments into becoming more self-disciplined. Seventy three percent of execs agreed with that statement. ‘This kind of economic pain is going to continue until governments stop spending more than they’re taking in,’ said one CEO. ‘The problem is that a lot of voters still don’t get that their government can’t live beyond its means forever, so politicians are not able to tackle the real problem of government spending.’

As for the future of the EU, respondents gave the possibility that one or more of the weakest Eurozone countries will leave to establish its own currency a 40 on a 100-point probability scale. The possibility that Germany will leave the Eurozone, alone or together with some other strong European countries, scored a 38. ‘The situation shows the problems inherent in tying different regions together,’ says one CEO. ‘The potential benefits are there in good times but the issues arise when one economy fails.’

EU leaders will debate ways of involving investors in bailouts and setting up a permanent economic safety net at the Dec. 16-17 summit in Brussels.