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Sarkozy: If Greece fails, there is no point of the Euro

08 March 2010 / 09:03:57  GRReporter
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This said the French president during his meeting with Greek Prime Minister Georgios Papandreou. "France will support Greece in its attempts to cope with the financial problems, and we have no intention to leave the country to fall into bankruptcy," he promised. Greek Prime Minister Papandreou visited Paris on Sunday as part of his plan to tour western capitals, with the objective to raise financial support. On Friday, Papandreou was in Berlin, where the reaction of Chancellor Angela Merkel was quite different from that of Sarkozy. The Germans promised political support but no financial resources. 

Greek markets increased after the successful auction of €5 billion in securities. Two weeks ago, the Athens Stock Exchange fell below 1900 points for the first time since April 2009 and this week the index is back above 2000 points, with a growth of 8.56 percent to 2082.6 points. The successful sale of securities and the many supporting European governments were the main reasons for this. 

Analysts at investment banks say that the Greek crisis does not affect investment in other Balkan countries like Bulgaria and Romania. Moreover, successful auctions of Greek securities may encourage Romania, which plans to market shares for about €1 billion. Strict measures to bring down the Greek deficit, however, will most likely shrink the country's economy and this will subsequently be reflected poorly on the surrounding countries, including Bulgaria. Representatives from the German Raiffeisen Bank, said that trade and financial services will suffer the most. According to UniCredit Bank the issues of Greece mean that the eurozone will increase its criteria for accession in the eurozone - which will reflect poorly on countries like Bulgaria, which are future candidates. 

In other economic news, the Euro and the British Pound fell sharply against the US Dollar. The EUR continued to lose against the USD and closed the week with 1.36 USD per EUR. Prior the beginning of the Greek crisis, the EUR traded at around 1.5 USD per EUR. In England, political concerns about "pending Parliament” (no majority of any party) badly affected the GBP, and so it close at 1.49 USD per GBP - and only a month ago the rate was 1.63 USD per GBP. 

Tags: Greek economy Budget deficit in Greece Economy news stock news
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