As European countries wrestle with heavy debts and seek to save the euro, there is almost no serious debate on pro-growth policies that are needed for the region, according to Threadneedle’s chief investment officer, Mark Burgess.

Austerity measures – assuming they are enacted as policymakers intend – create a pessimistic outlook for the eurozone economy in 2012, even for Germany, still the region’s strongest and largest financial power, Burgess said in a note.

Controversially, Burgess said he hoped that a slowdown will force the European Central Bank to turn on the printing presses via quantitative easing.

“One has to hope that this looming recession (in reality we are probably already in it) eventually acts as a catalyst for the introduction of QE as the situation is likely to progressively deteriorate until it is,” he said.

“For very obvious reasons, for most of this year the investment backdrop has been dominated by the issues surrounding the euro and the eurozone… Much of the focus has been on whether the euro will survive, and in what form and constituents. The authorities appear to lurch from one crisis to the next, setting out policy measure after policy measure in an effort to appease the markets and buy themselves some breathing space,” he said.

Burgess’s comments add to those of other investment and wealth management strategists who are bearish on the eurozone for at least the first half of 2012, given the deleveraging underway in the banking sector and the austerity measures designed to cut debt. As an example, here is Gayle Schumacher, head of investment office at Coutts: “Periphery euro-zone countries remain uncompetitive. With these economies now refinancing debt at well over 6 per cent and with no growth, it is clear that debt numbers will continue to compound. Against this fierce austerity backdrop, we are guaranteed a rocky first quarter as European politicians ask the electorate to approve plans for fiscal union.”

Threadneedle's Burgess added that it does not appear as if European voters understand the full implication of what any plans to create a pan-eurozone fiscal policy, with an unelected body approving national budgets, really means.

“I fear that as the full implications of this begin to sink in, an increasing number of euro constituents will feel the need to hold referendums on the issue. This will place further tensions on the system as faced with this undemocratic construct, it will be voted down. I remain of the view that the euro will ultimately be constituted by a much smaller group of countries than it is today,” he said.