Wednesday, April 28, 2010

Greek financial crisis could hit Britain, warn economists

They warned that hedge funds and speculators would pick off weaker European economies “like they did with the banks”, while senior businessman said the party that wins the election had to be on a “war footing” to deal with the scale of the crisis.

A widespread stock market sell-off was triggered yesterday when ratings agency Standard & Poor’s cut Greek debt to junk status, while a downgrade to Portugal reignited worries about a growing eurozone crisis.

Delegates to the Institute of Directors' annual convention in London today said that they were concerned about the problems afflicting Greece spreading to the UK.

John McKenna, a director bakery ingredients business AB Mauri, said: “Hedge funds and currency speculators will just pick them off. When they have broken Greece they will move on to others, like they did with the banks.”

"The investors will go from Greece, to Portugal, Ireland, Spain and then will move to the UK. They will move to where they perceive the weakness to be.

“It is very similar to what has been happening to the banks. It is the first real test for the eurozone. If we let Greece go, then what is next?"