US weakness is a major headwind for Europe

ON EUROPE

Schroders' Rory Bateman explains why it is not just contagion weighing heavily on investors' minds.

The knock-on effect of US weakness on Europe is a concern, given the fact that the weaker peripheral European countries need a robust global backdrop to carry out their austerity measures. Lower US GDP growth means lower global demand, which feeds through to lower tax receipts for European governments. Another major concern recently has been the eurozone crisis impacting Italian and Spanish bond spreads, as investors fear a contagion effect across the most vulnerable eurozone nations. At the end of July, European leaders agreed a new package of financial aid to Greece, Ireland and Portug...