Fears over short term increases in Base Rate by the Bank of England have intensified recently, as Greece nears an exit from the EU.
Greece has until the end of June to find €1.6bn (£1.1bn) to repay a loan from the International Monetary Fund, or face defaulting on it and risking expulsion from the EU.
“This potentially has huge implications here in the UK for borrowers or savers” says Andy McBride, a Business Development Director at Contractor Mortgages Made Easy. “Should Greece default on this agreement and be expelled from the EU, it would leave a potentially catastrophic hole in the finances of the EU, with confidence in trading with other indebted countries plummeting.”
Should Greece not repay its creditors, an alarming precedence could be set, which would make investors incredibly nervous about other indebted countries, such as Italy and Portugal, being able to service their own debt, or even stay within the EU.
“Many have predicted that Base Rate will increase at some point in the coming 12 months, however Greece collapsing could pull this date forwards, potentially costing thousands for mortgage borrowers in additional interest payments” adds McBride.
While this may add fuel to the fire for those who say the UK should pull out of the EU, with it brings many benefits, as Andy explains. “EU competition law has been of great importance in opening up previously closed markets to new entrants, enabling British companies to expand on the continent.”
“While it is sometimes controversial the right of free movement for EU citizens is valuable for employers as it enables them to recruit from a far wider pool. British employers have made extensive use of this access to a larger potential workforce in order to tackle some of the UK’s skill shortages.”
Greece must repay the loan by the end of June or risk crashing out of the single currency and possibly the EU. Talks have been in deadlock for five months. The European Commission, the IMF and the European Central Bank (ECB) are unwilling to unlock the final €7.2bn tranche of bailout funds until Greece agrees to economic reforms.
Withdrawals from Greek bank accounts reportedly topped €4m last week as many savers panicked about the safety of their funds. With the deadline of next Tuesday looming large, this week really is a make-or-break one for Greece, and Europe as a whole.
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080