Euro keeps falling as debt fears spread
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Markets around Europe have continued to fall as experts begin to contemplate further debt crisis management in the Eurozone.
The FTSE has fallen to ten-week lows today at 5,396, while the Euro fell to 1.29 against the US Dollar, a 12-month low. Both the German and French markets also fell by 2.6 per cent and 3.2 per cent respectively.
The drops come after investor fears of sovereign debt crisis contagion across the Eurozone, in spite of this week’s €110bn Greek rescue loan package. Spanish debt yields rose to 4.24 per cent while Portugal’s rose to 5.57 per cent.
This comes as the European Commission reveals the Greek economy is set to shrink by 3 per cent this year.
Experts have warned that the Greek rescue plan is unfeasible. Currently, the proposed austerity programme envisages that the Greek government deficit will be cut from as much as 14 per cent of GDP in 2009 to 8.1 per cent of GDP this year and then down to 2.6 per cent in 2014.
Barclays Capital chief French economist Laurence Boone says: “Financial markets are likely to be sceptical as to the feasibility of the adjustment. Greece is attempting to adjust its primary balance by a magnitude that has seldom been achieved historically in Western Europe. Such an episode of fiscal tightening, if achieved, would constitute a near-record.”
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Readers' comments (2)
derek richings | 5 May 2010 1:53 pm
well well ......... Gartmore Fund Managers predicted all of this some 2 years ago I wonder if they are as pleased as this Euro sceptic??
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Simon Mansell | 5 May 2010 4:42 pm
SHADES OF BROWN
State pensions frozen or cut; contribution period up from 37 to 40 years
Average retirement age up from 61 to 63; early retirement restricted. This is Greece, perhaps Spain to follow but how far behind them is the UK? Its a pity our FSA does not regulate its masters in the treasury!
UK public expenditure take note - we are no far short of the same problems! We have seen the demise of the Defined Benefit Pension Scheme in the private sector, and then been told we need to save more and not to expect to retire before the age of 70, while at the same time the Government and public sector unions expect private sector workers to pay taxes to fund public sector pensions so that they can retire well before 70 on a guaranteed index linked scheme for life. How fair is that?
It' time for the public sector cuts to match those of the private sector before the UK needs to be bailed out by the IMF and have the same cuts imposed because we can't manage our own affairs.
SIMON MANSELL
TEMPLE BAR IFA LTD
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