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It is tempting to look at idling car accident became and write off the whole region from a point of view of investment in the euro area.?Photo: REUTERS

My most positive vision of the American market is supported by continuous political stimulus that is courageous or rider depending on your point of view, but in both cases, has the desired effect. However, in the grip of austerity, the prospects for next year, as in the United Kingdom European regions are also frosty as weather forecasts.

It is tempting to look at idling car accident became and write off the whole region from a point of view of investment in the euro area. As the financial crisis drags on in its fourth year, it is not difficult to see why investors are looking for a better story in the developing world.

I expect the sovereign debt crisis continue to be the main story in Europe 2011 - in fact, it will likely dominate markets for years to come as the long process and slow repairs to balance the periphery lingers in a day grind of restrictions and even growth.

Agreement last week on the need for a permanent installation of bailout underlines the nature of future recovery slow combustion. Ultimately, debts must be paid down or written off the coast, but in an environment of low growth, the former will take several years while it is too systemically risky achievable in the short term. There is no quick fix.

But this does not mean that the whole of Europe should be denied as a zone of exclusion investment. Upcoming fiscal tightening will spread very unevenly around the region, with the Germany and the rest of the core look less contraction of 1pc so that for the Greece Ireland and Portugal Spain 3pc is the minimum required.

As well as kick off this involves spending power, the fiscal sustainability path from the periphery market skepticism means that financing costs for Governments and businesses remain so much, much higher on the fringe as healthy heart of the continent.

Economic growth on the edge is contract or remain stubbornly low in all four pigs (Portugal Ireland, the Greece, the Spain) and this means that differing unemployment in the graph, we reproduce here be reversed any time soon.

In 2010 there is a clear correlation between estimates of GDP growth and yield of domestic markets. The driver key markets changed since the beginning of monetary union sector to national distinctions differences.

We went back to a world of pre - EMU, in which investors recognize there is a fundamental difference between a Germany and Greece which should be reflected in the prices of assets.

I see no reason why this trend should continue in 2011 current budgetary austerity programmes to lower domestic demand and lack of competitiveness periphery stifles exports.

In contrast, the German consumer begins to awaken a long sleep. Confidence increases sharply and unemployment was inferior position for several years now. It was long while since the queue unemployed German was shorter than the us.

The Germany has another advantage in the countries of the edge. It makes things that parties further rapid growth in the world want to buy and which has been translated into the relative performance of the companies with an exhibition in the BRICs (Brazil Russia India, China) compared to those of fortune in the developed world.

I think that this trend will continue next year and, in fact, it will probably be the safest play theme emerging markets for long term during the year in which increasing inflationary pressure result in varying degrees of monetary tightening in emerging countries.

Goldman Sachs has studied business performance Japanese for 20 years and those who are exposed to the growth in demand overseas has surpassed their peers for many years. A similar trend, coupled with low assessments that have left many companies leaders yield dividend, tempting means that forecasts for Europe are not as uniformly ice that it might at first glance.

tomrstevenson@fil.com

Tom Stevenson is a Director of Fidelity Investment Managers investment. The views expressed are his own.

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