G8 Summit at Camp David with euro crisis on the agenda
David Cameron has arrived in Washington ahead of the annual G8 Summit. The eurozone crisis is likely to dominate the agenda with Greece in the brink of default and concerns over Spain’s banks looking increasingly vulnerable.
It will be the Prime Minister’s first chance to have face-to-face talks with the new French Prime Minister, Francois Hollande who has already met President Obama last evening.
Not all of the leaders agree and there is nothing positive about the uncertainty and confusion on the stock market right now. What is happening in the eurozone is truly worrying; although Britain does have some advantages because of its own currency, own central bank, strong government and strong deficit reduction plan.
But of course, if things do go badly wrong in the Eurozone, this will affect the UK as 40% of the country’s export trade goes there.
It all started in Greece, but it doesn’t look like it will end there. Italy is undergoing an unpopular deep economic reform, which is making good progress but still not enough to protect it from the potential Greek exit. Spain is looking the most vulnerable country after Greece at the moment, as 16 of its banks had their ratings downgraded yesterday. France has a new President finding his feet whilst ruffling a few feathers doing so. If there were any doubt that, by not being part of the euro, Britain was in anyway sheltered from these effects now edging closer to our front door, think again.
Yesterday Moody’s downgraded Santander UK, based on its links with its parent company in Spain. Santander UK say that the two operations are completely separate and there is nothing to worry about. But one of the aspects of the contagion can be that fear and mistrust outweigh reality common sense, therefore making a bad situation a lot worse.
A market analyst says: “We are two years into the Greek problem and we are nowhere fixed yet; it has cost us hundreds of billions of euros. The markets are incredibly nervous and shaking with what’s going on.”
The advantage of the G8 leaders meeting over the weekend is that they will have two days to come up with something positive before the markets re-open on Monday morning. The end result of course won’t doubt that but it isn’t a resolution.