The euro will collapse below parity with the dollar next year as the European Central Bank “kamikaze” rate rises backfire and a scramble for energy supplies pushes the bloc into a prolonged economic downturn, City economists have said.
JP Morgan, ING, Capital Economics and Barclays all believe the single currency will drop below parity against the dollar within months to a fresh 20-year low.
They forecast for a 10pc fall in the euro, taking it down to a 20-year low of $0.95. One euro is currently worth $1.05.
The gloomy predictions come despite hawkish talk from Christine Lagarde, president of the European Central Bank (ECB), and predictions that interest rates will climb close to a record high next summer.
Jonas Goltermann, senior economist at Capital Economics, said expectations of higher rates had already exposed highly-indebted Italy to a borrowing shock that risks reverberating throughout the eurozone.
He said: “What…
