What does this mean for other countries?
As well as Greece, banks and credit rating agencies are going through their books looking for other bad risks. That means countries that have a big budget deficit, compared with how much money their economy generates. The crisis in Greece is being felt in financial markets around the world. Portugal and Spain are reckoned to be two that could face problems next. The EU hopes that its bailout will reassure the money markets that their cash is safe. However, that depends on Greece getting control of the situation and proving it can make the cuts needed. The UK does not use the Euro currency, but could still be affected. Its budget deficit is also large, and we could start to appear unattractive to lenders.
As well as Greece, banks and credit rating agencies are going through their books looking for other bad risks. That means countries that have a big budget deficit, compared with how much money their economy generates. The crisis in Greece is being felt in financial markets around the world. Portugal and Spain are reckoned to be two that could face problems next. The EU hopes that its bailout will reassure the money markets that their cash is safe. However, that depends on Greece getting control of the situation and proving it can make the cuts needed. The UK does not use the Euro currency, but could still be affected. Its budget deficit is also large, and we could start to appear unattractive to lenders.
UK banks also hold some of the debt of countries such as Greece, Spain, and Portugal. If they were to go bankrupt, it would mean more problems for Britain's banks. In the mean-time, there is some good news for holidaymakers. A fall in the value of the Euro means the pound currently goes a bit further at the bureau de change.
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