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Thanks to everyone who responded to our 'Should Britain leave the European Union?' article on Friday. We received more than 170 comments as the debate raged, which is excellent.
Clearly, many of you think David Cameron's decision to 'effectively' veto an attempt to restore economic credibility to the eurozone by amending the Lisbon treaty was a brilliant move.
I have to say I'm not so sure. I think the prime minister has been shown to be more puppy dog than bulldog by allowing himself to be outmaneuvered by France and Germany. Sure, we didn't want to sign up to the fiscal compact, but did we really want to end up 26-one down?
My dismay at our renewed isolationism deepened over the weekend as I read a Financial Times report on how Cameron was not present at a pre-summit meeting of centre-right parties in Marseilles. Cameron pulled the Conservative party out of the grouping two years ago and so was not on the guest list, which meant he could not press his case to 'Merkozy' or counter the damaging impression he was seeking a full opt-out for financial services from single-market rules.
According to the FT, the situation worsened as the summit began as British diplomats had been instructed to keep quiet about Cameron's position. 'The British seemed to believe that Mr Cameron could win his City concessions by delivering them at short notice at 2am, bouncing leaders into accepting them. According to officials, Mr Cameron's plan barely got a hearing.'
If true, this is a cock-up of historic proportions.
Of course, many Citywire Money readers are glad we have jumped off what could be a sinking ship, so perhaps the prime minister will be proved right, even if he was pandering to the right wing of his party.
Whatever your opinion of the political dimension, the investment and financial outlook for Europe is pretty dire. The consensus of opinion is that although steps have been taken to sort out the long-term economic structure of the eurozone, the short term looks hazardous.
None of the proposed measures to stabilise government bond markets are likely to stop Standard & Poor's from downgrading the ratings of up to 15 eurozone countries it put on credit watch last week. S&P's main rival Moody's today said it will review its European sovereign ratings in the new year and Fitch has expressed its disappointment at the lack of action by the summit.
A wave of European sovereign bond downgrades will hurt the banks even more, and could send the eurozone into a vicious downward spiral as banks and sovereigns' weakening credit ratings sap each other's ability to drag themselves out of the quagmire. A long and damaging recession seems likely.
So, returning to my question of a few weeks ago, should investors sell their European funds? Bailing out seems justified given the uncertainties. Moreover, getting out might not crystallise big losses.
A look at our fund and fund manager performance page shows that for sterling-based investors, Europe has surprisingly not been the worst market of the year. Europe may have been the root of global uncertainty, but the average one-year loss to the end of October of unit trusts investing in the continent is just over 6%. This could have been a lot worse, and the fact it has not been reflects the surprising strength of the euro, driven, it is thought, by distressed banks repatriating their assets.
It is China, down 16.8%, and emerging markets, down 9.5%, and the Asia Pacific, 6.5% lower, that have suffered more.
Nevertheles, only seven out of 108 unit trusts in the Europe ex UK sector have produced a positive performance this year.
Our unit trust league table shows they are:
The Invesco Perpetual fund has done particularly well. Under Citywire AA-rated Adrian Bignell the European Opportunities fund is top of the table over three years with a 118.5% return.
Meanwhile, share prices in Europe ex UK investment trusts have fallen by 11% on average over one year. Fidelity European Values has done best with a 6.1% fall and SR Europe has done worse, fallling 14.5%.
My fear is these returns could get a lot worse if the crisis deepens, leading to a collapse in a European bank and a slide in the euro. Today's fall in the euro could be a taste of a lot worse to come.