The euro fell against both the dollar and the pound as economists forecast a difficult time for markets globally until the Greeks vote in Sunday’s referendum over whether or not to accept the austerity package the eurozone nations, the European Central Bank and the IMF want to see introduced before extending the multi-billion bailout package to Athens.
Yet, while the ramifications of a Grexit for the whole concept of the eurozone could be profound, some analysts belief the knock-on effects for the global economy might turn out to be only peripheral and short lived.
“The fact is that Greek is a nation of about 11 million people and, obviously, not a major player on the world stage,” one bank economist told relocatemagazine.com.
“A Grexit would be pretty damning for the single currency project and there could be nervousness over the future of some of the weaker eurozone economies, but the practical damage to the global economy in the long term could be pretty minimal.”
Immediately, the big losers of the crisis stand to be Germany and France, which have contributed £40 billion and £30 billion respectively to the Greek bailout.
The US economy, the world’s largest, appears relatively immune. “The direct effects on the US are minimal,” said Paul Mortimer-Lee, chief economist at BNP Paribas.
He said US exports to Greece accounted for less than a billion dollars of the total of $2.25 trillion. Mr Mortimer-Lee said the main worry in America would be indirectly through the way a Grexit affected European-wide markets.
He added that US banks would be little affected by a Greek default. “Bank for International Settlements figures show that the exposures of US banks to Greece amounts to $12.7 billion, or just 0.04 per cent of total cross border claims.”
UK banks are estimated to have £7.7 billion tied up in loans to Greek banks, businesses and customers and getting the money could be complicated were Greek to leave the eurozone.
However, Huw van Steenis an analyst at Morgan Stanley, says that European banks have reduced their exposure in exposure by more than 80 per cent over the past four years.