Grexit Back On The Cards
Another day, another Grexit story. This story keeps changing but one thing that doesn’t look like changing is Angela Merkel. The markets are looking at her and thinking that the likelihood of her agreeing to any sort of compromise is currently situated midway between slim and none. Any soundbite she has given certainly doesn’t show any sign of movement and as the time that Greece runs out of money draws ever closer, the markets are starting to show signs of getting rather jittery.
The markets don’t like uncertainty and the cloud of the Grexit is still certainly hanging over us. The G20 are urging a solution and our own George Osborne is hoping for a compromise ahead of what would be a very damaging event for the world economy. Moody’s have downgraded five Greek banks to just above the default level as the “possible deadlock in the government’s negotiations with official creditors could place at risk its own liquidity and funding needs”.
The UK economy still appears strong but there are obstacles in its way. The impact of what is happening in the Eurozone can’t be underestimated and we have a General Election in May where the result is far from certain. However, labour market conditions are improving and an interest rate hike is still on the horizon, however far away that horizon may be.
Major data releases today include industrial production, manufacturing production and GDP figures from the UK, wholesale inventories from the US and no doubt more rhetoric regarding Greece and the Eurozone.