Greek financial crisis drags down the Euro
The true extent of the economic mess resulting from the banking crisis is becoming apparent as Europe replaces the old food mountains with a new debt mountain of billions of Euros.
Many European countries popular with British expats face huge financial problems that are impacting on the value of the Euro.
Greece is in the news as the country is in chaos while the government battles with striking workers in efforts to try and grapple with debts that may need a £26 billion EC bail-out.
Portugal and Italy - two favourite expat destinations - are also holding out the begging bowl as they have racked up more debt as a percentage of gross domestic product (GDP) than cash-strapped Britain.
Shocking EC debt figures revealed
The shocking total debt figures are 114.6% for Italy, 112.6% for Greece and 77.4% for Italy. The comparable figure for the UK is 68.6% and 54.6% for Spain, according to EC figures.
In the short term, the Euro is falling as a result of this financial disaster for Europe. That means as long as the Pound does not fall as well, spending power of expats improves.
As the EU moves to bail out the faltering economies, the value of the Euro is expected to rise against the Pound and US Dollar, which will erode spending power. Some economists have suggested Greece and some other countries should quit the Euro to stop dragging the currency down.
EU will underwrite debts, confirms G7
The EU Commission has privately spelled out that Greece would be bailed out if necessary. The country’s debt has rapidly increased and stands at almost 13% of the national economy.
Wolfgang Schaeuble, the German finance minister, argued Greece would have to make financial sacrifices to rein in the deficit.
”Greece has to realise that when you break the rules over a long period of time, you have to pay a high price,’ he said.
He was speaking at a meeting of the G7 group of leading economies, who concluded that the EU stands to foot the bill to stop the Greek debt crisis dragging the euro down even further.
