Editor's choice: The end of August may herald a relatively quiet period for wealth managers, but the newsflow remains busy and fears remain about the future of the eurozone. Below is an example of how concerned some investors now feel about the currency bloc, which is barely more than a decade old. 

There are few grounds for optimism about the future of the eurozone with outcomes either being full-scale, politically contentious fiscal union or break-up of the currency bloc, Ian Kernohan, economist at Royal London Asset Management, argues in a note.

He is commenting at a time of continued fear that the eurozone could buckle under strain of heavy debts in countries such as Italy, Greece, Portugal and Spain, forcing some nations either to quit the bloc, or requiring a new economic central government to oversee it.

However, the possibility of a single fiscal policy for the whole eurozone raises the question of how it can be held accountable to voters who do not feel particular loyalty or identification with the EU, he writes.

“At the heart of this problem is the question of whether the eurozone is ready for central control of national budgets. There is a huge democratic deficit here, as the European Parliament is not seen by many people as a legitimate expression of popular sovereignty,” Kernohan says.

“Many, I should say most, people do not even know the name of their MEP. The differences between countries in terms of language, culture and attitude to debt appear too great when compared with the differences within other monetary unions, such as the UK or US. Perhaps I’m wrong and there is a solution which lies somewhere between full fat super state fiscal union and euro break-up, however it is difficult to see the possible outcomes as anything other than binary,” he says.

Meanwhile, he says, the possibility of a “mild global recession” is now priced in by investors, so if the economy does contract, it should not jolt markets over-much.