By Maximilian Clarke
As the prospect of a renewed financial collapse in the Eurozone looms, Europe’s eyes have turned once more to Greece as the country awaits a crucial referendum.
John Dowthwaite, CEO of SimplyStockbroking discusses the implications of the vote and the responses by Europe’s financial centres.
Markets around Europe have taken a dive following the announcement of a Greek referendum on the European bailout. Last week European leaders agreed on a 50% write-off on Greek debt, but now with the announcement of a referendum fears grow on whether the deal will be done. This announcement stunned European markets and caused them to plummet.
The FTSE 100 in London was down 3.0%, whilst the DAX in Frankfurt fell 5.2% and the CAC 40 in Paris dropped 4.5%.
Shares in European banks were the biggest casualties this morning, with Credit Agricole down 11.5%, SocieteGenerale falling 14.4%, BNP Paribas down 10.5% and Barclays 9.3% lower.
The fall in the markets are mainly due to the concern around whether voters would accept the austerity measures suggested. If Greece were to reject the deal then it would result in immediate national bankruptcy; in turn causing economic instability across Europe. The current fluctuations in the market will continue until there is some form of clarity from pan European government.
We will have to wait and see whether or not the deal is rejected, in the meantime European markets should prepare for damage limitation on its own markets and banking system.
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