CITY MONEY MEN BURN MIDNIGHT OIL IN FEAR OF GREEK APOCALYPSE NOW - express.co.uk CITY MONEY MEN BURN MIDNIGHT OIL IN FEAR OF GREEK APOCALYPSE NOW - express.co.uk

Saturday, June 16, 2012

CITY MONEY MEN BURN MIDNIGHT OIL IN FEAR OF GREEK APOCALYPSE NOW - express.co.uk

CITY MONEY MEN BURN MIDNIGHT OIL IN FEAR OF GREEK APOCALYPSE NOW - express.co.uk

While Greece has a small economy, worth just 172.9billion, a disorderly default and an exit from the euro could have big consequences around the world. Thursdays Mansion House speeches by Chancellor George Osborne and Sir Mervyn King, governor of the Bank of England, show how they fear the eurozone storm.

This week the BoE will begin offering UK banks 5billion a month of cheap funding to help them survive problems caused by the eurozone. Sir Mervyn also hinted that central banks in the US, UK and Japan could take co-ordinated action to flood the markets with billions in cheap finance to stop the global economy seizing up and keep banks afloat.

For Britain, hopes of a trade-led recovery have long passed because of the EUs troubles. Our trade deficit jumped last week, in part due to a 6.8 per cent fall in exports to Europe.

If a large eurozone economy is engulfed, the Office for Budget Responsibility says it could lead to two full years of recession in Britain, shrinking the economy by 1.9 per cent in 2012-13 and 0.2 per cent in 2013-14. A Greek euro exit could also mean a further 121billion loss on money loaned and pledged to finance the euro, the Bruges Group think-tank has said.

The resulting collapse in market confidence would send share prices plummeting around the world, hitting pension pots and savings.

Billy Burrows, of the Better Retirement Group, said anyone buying a 100,000 pension annuity will get 10 per cent less for their money than a year ago because of falling gilt yields. A Greek exit could also lead to a run on European banks, especially in Portugal, Italy and Spain, where the banks received a 100billion euro bailout only last week.

If no party wins today, coalition talks could drag on for weeks, destabilising markets and forcing central banks to pump billions into the banking sector to stop a new credit crunch.

With so much riding on such a small state, the outcome of todays elections in Greece will be watched nervously around the world.


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