Arab Today, arab today knife edge as greece goes to polls
Last Updated : GMT 08:45:51
Arab Today, arab today
Arab Today, arab today

Knife edge as Greece goes to polls

Arab Today, arab today

Arab Today, arab today Knife edge as Greece goes to polls

Athens - Arabstoday

Greeks head to the polls today as the spectre of the country\'s possible exit from the euro zone looms over Europe, global markets and central banks across the world.The elections come at a critical time for the single currency\'s survival after borrowing costs for Spain and Italy jumped to record highs and 10 more European banks were downgraded. \"There\'s a lot riding on these elections,\" said Jarmo Kotilaine, the chief economist of NCB, Saudi Arabia\'s biggest bank. \"Greece may be a deciding factor in a general environment where people are openly asking questions about the future of the euro.\" Financial markets closed higher on Friday after polls suggested the pro-European New Democracy party would win the national parliamentary elections. But its rival, the radical leftist Syriza party, has pledged to renege on the country\'s €282 billion (Dh1.3 trillion) bailout agreement and is closing the gap with voters. Investors fear such a scenario could lead to the debt-laden country leaving the 17-nation single currency and risk what seemed unthinkable until recently: an unravelling of the 13-year-old euro project. \"If Greek political parties do not commit to [what the previous government] agreed to with the Troika, Greece must leave the euro,\" said Dieter Hein, a banking analyst at Fairesearch in Frankfurt. Central Banks are already primed to take action in the event of a so-called \"Grexit\". Officials from the Group of 20 leading and major emerging economies, which meet in Mexico this week, have signalled they will move to stabilise markets by pumping cash if the global outlook is under threat. It follows the European Central Bank (ECB) president Mario Draghi on Friday saying it would continue to supply liquidity to solvent banks if needed. Meanwhile, on the same day, the Bank of England announced it would flood its banking system with more than £100bn (Dh568.7bn) in a bid to revive the flow of credit. Analysts have also warned that Greece faced a perilous state if it left the euro. \"From an economic perspective, adopting a national currency is likely to be very costly for the Greek population,\" said Moritz Kraemer, the head of Europe, Middle East and Africa sovereign ratings at Standard & Poor\'s (S&P). An exit would not solve Greece\'s fundamental problems of a small export base, lack of competitiveness and large external imbalances. S&P believes there is a one in three chance of a Greek exit. The elections are the latest risk to the euro zone after a tumultuous 10 days. Despite a deal to supply Spain\'s troubled banks with up to €100bn, the country\'s 10-year bond yield hit a euro lifetime high above 7 per cent on Friday. Mariano Rajoy, the country\'s prime minister, yesterday called his nation\'s borrowing costs \"unreasonable\". \"Those that owe the most are more affected when access to markets is difficult,\" Mr Rajoy was quoted by Bloomberg as telling parliamentary members during an official meeting in the northern city of San Sebastian. Italy, another country beset by soaring borrowing costs, has announced plans to raise €10bn through the sale of three state-owned companies in a bid to cut its debt mountain. Investors are concerned Italy may be next in line for a financial bailout as it staggers under the weight of public debt equal to about 120 per cent of its GDP. In a further blow to the single currency, the credit ratings agency Moody\'s cut its ratings on five Dutch lenders, including ING Group and state-owned ABN Amro due to the impact of a weak Dutch economy and falling house prices. Focus today will also be on the second round of parliamentary voting in France. The Socialists look set for victory, strengthening the hand of François Hollande, the new president, to push forward tax-and-spend reforms.

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Arab Today, arab today knife edge as greece goes to polls Arab Today, arab today knife edge as greece goes to polls

 



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