EU anti-crisis arsenal fails to dent Greek default risk

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Hundreds of billions of euros earmarked by the European Union (EU) to fight the euro zone debt crisis have done little to improve the chances of Greece avoiding a debt restructuring in the next five years, a Reuters poll suggested.

Forecasts from the survey of 36 economists also showed the European Central Bank's credibility has been hurt by its purchase of government bonds from euro zone issuers, having long held out against such measures.

The poll showed a median one in three chance that Greece would restructure its debt pile in the next five years.

Despite the EU's announcements of a 110 billion euro package directed at Athens and a USD 1 trillion safety net for euro zone states, that figure was a little higher than the 30% seen in an April 28 poll with a larger sample. That poll was taken before both measures were announced.

Respondents in the latest survey also gave Portugal a 20% chance each of a debt restructuring in the next five years, and Spain and Ireland a 10% chance.

Reuters's long-term euro zone economy poll published last week suggested the safety net would bring calm to markets, but the euro has performed dismally this week, hitting a four-year low against the dollar on Wednesday, and stock markets have slumped.

Asked what more policymakers can do to turn sentiment around, economists in Friday's poll pointed to deep-rooted structural reforms spanning the 16-nation bloc.

"It's hard to foresee miracle moves," said Luca Mezzomo of Intesa Sanpaolo.

"EU governments should fix the structural weaknesses of the surveillance system over private and public financial imbalances, set up a convincing mechanism to deal with the crisis and work on credible consolidation programmes for government accounts."

Other respondents said EU governments had to close ranks with far greater enthusiasm.

Germany shocked markets late on Tuesday when it introduced a ban on some short-selling of assets without consulting EU peers, which ECB Governing Council Member Nout Wellink on Thursday described as "not helpful".

"Policymakers have to demonstrate greater cohesion within the European Union and have to go ahead with stricter regulation on financial markets," said Paula Carvalho of Banco BPI.