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Stock markets spooked over Greek crisis

Stock markets spooked over Greek crisis

Category: Investments

Updated: 21/06/2011
First Published: 21/06/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The growing prospect of an all-out collapse in Greece has spooked stock markets across Europe.

Finance ministers from across the continent have warned Greece that it must impose a number of hard-hitting austerity measures if it is to receive its next loan of 12 billion euros (£10 billion) to save the country from defaulting on its huge debts.

However, the Greek Government has already implemented a number of measures that have led to riots in the Greek capital, Athens.

They include privatising state-owned companies as part of measures to save £28 billion euros.

And this morning's news that the latest bail-out instalment has not yet been guaranteed led to falls in stock markets in the UK , France and Germany

The failure to come to an agreement saw the FTSE 100 fall by just over 1% in early trading, falling to 5650 points.

Partly state owned banks Lloyds Banking Group and Royal Bank of Scotland were hit by falls of 3.2% and 2.7% respectively.

Among the other markets to be hit by the crisis were France and Germany , with the CAC 40 falling by 1.7% and the German DAX declining by 1.25% yesterday morning.

The UK 's Chancellor, George Osborne, faces pressure not to plough any of the UK 's funds into another bail-out package and has assured those concerned that he would not pass any UK involvement in a further European Union bail-out effort.

He could be obliged to contribute to a bail-out by the International Monetary Fund, which could cost the UK another £1 billion, it has been estimated.
The Cebr has said that the eurozone is 'almost certain' to break up in the next five years and probably by 2013.

"Sooner or later both the Greek population and international creditors will tire of fighting a loosing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries," Douglas McWilliams, chief executive of Cebr added.

"A series of bail-out packages and eventual debt restructuring will delay this moment, but it will come."

The Mayor of London, Boris Johnson, has added his voice to the debate, using his weekly column in a national newspaper to call for Greece to be allowed to go bankrupt and leave the euro.

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