In the latest of efforts by the French and Germans, a three layered deal was set up whereby Greece could default on a portion of its debt accrued in the bailout. This could mean that Britain would also be involved in a £1.75 trillion package that has the sole purpose of saving the euro.
If this strategy goes forward, it would allow for what is being termed an ‘orderly default’ by Greece which has the aim of ending the sovereign debt crisis in the eurozone before it has a chance to hit. If the debt crisis were allowed to spiral out of control, it is feared that the entire globe would be sent back into recession.
News in Britain isn’t good at the moment since the largest manufacturer in the country, BAe Systems, has just announced that 3,000 jobs are to be cut. With increased debt as their part in the latest efforts to save the eurozone, many fear that the problems will have the reverse effect and spread to the UK.
The deal is meant to keep the crisis in Portugal, Greece and Ireland from spreading but many of the G20 countries spearheading the deal are on the brink of crisis themselves. The main thrust of the three layered deal is to bail out European banks that have placed themselves in crisis by lending to failing economies. This is what happened in France and what the UK fears might happen here.
If G20 agrees to these measures, UK taxpayers will end up footing more than the £1 billion that had already been committed as their part. Although Britain’s involvement would be limited since they are not a member of the European Financial Stability Fund, the country’s portion is large enough to have a significant effect on an already troubled economy.
