ERPF April Factsheet Now Available
The woes in resolving the Greek debt crisis rumble on but now with increased earnest as markets begin to lose faith in the ability of the ECB, IMF & Greek Government to resolve the crisis. Talk of contagion with other fragile economies such as Portugal, Ireland and Spain abound.
At the heart of resolving the issue is Germany who, fundamentally, is reluctant to support any bail out of Greece without attaching severe austerity measures. Greece meanwhile is pushing back on the degree of public spending cuts required to satisfy its EU member counterparts. Greece’s Prime Minister knows only too well the potential backlash from it’s citizens if he is forced to push through the cuts in public spending and tax rises currently proposed.
All the while the EUR continues to fall against the USD with the EUR down 1.75% in April 2010 (source: Financial Express) and European equity markets fell over 1% (FTSE Eurotop 300 down 1.01% in April 2010 Source: Financial Express).
Fortunately a political consensus prevails that the EU will act to resolve the problem and that a massive rescue package is imminent. The shape and size of any bail out will be pivotal to stabilizing market sentiment but for how long? Some commentators ask how pumping more money on top of a undamentally unstable economy can prove sustainable? Others maintain that the EU has little choice if a crisis of confidence in the EURO is to be avoided.
Meanwhile in the UK we have a general election underway and if one believes the polls, the likelihood of a hung Parliament in the UK ? the first since 1974 – is significant. With no party showing signs of a clear lead, any hung Parliament is likely to unsettle markets should any coalition Government fail to convince the British public that it can operate in a credible and sustainable manner. With a fiscal deficit the highest in UK post war history any incoming Government will clearly have its work cut out to quickly calm markets and start reducing the deficit.
Finally, and if the above wasn’t challenging enough, the shock US news of the SEC civil law suit of Goldman Sachs over its alleged failure to disclose information to investors sent many Bank’s shares tumbling. At a time when Banks are just beginning to restore their somewhat battered reputations this news is clearly unwelcome. Let’s hope the allegations prove unfounded.
More information is available in the ERPF April 2010 Factsheet
