UK Refuses to Bail Greece Out

Posted by on Jun 22, 2011 in Blog, Business, Featured, Finance, International Politics | 16 comments

In the most recent news concerning the ever-widening Greek credit crisis, the United Kingdom has refused to provide bailout funds in a euro zone package designed to give the bleeding country more money to get back on its feet. Great Britain contributed funds to the last bailout as part of the International Monetary Fund (IMF), but has been weary of contributing to financial assistance in other areas. This partly has to do with the country’s public opinion, which, in addition to having a very strong anti-euro-zone sentiment, is concerned with how this second bailout will even help any, considering the lack of progress the first Greek bailout received. Many people believe that there’s no amount of money that could be thrown at the situation to alleviate the Greeks’ pain, and that another bailout is a waste of money that won’t address or accomplish the restructuring that needs to be done within the country.

Although Great Britain acknowledges that it is essential to a healthy and stable euro-zone, Prime Minister David Cameron has stated that the government still does not feel that it is somehow responsible for contributing financially to the bailout, even if a stable euro-zone is in the nation’s best interest. But continental financial stability is important to the UK, England has relatively little Greek exposure, with British banks only holding about $4 billion in Greek sovereign debt, where as France and Germany hold $16 billion and $20 billion, respectively.

According to http://www.d3q.com, while Great Britain may be the continent’s third largest economy behind Germany and France, they seem even less concerned with the bailout because they were not included in “core discussions” concerning the Greek economic relief effort. Prime Minister David Cameron has expressed this to European Commission President Jose Manuel Barroso without significant tension, and it seems the European Union is at least somewhat understanding of the UK view.

As we wait to see how the second Greek bailout comes to form, one thing is obvious: most countries, participating or not, don’t believe this bailout will have significant long term impacts any more than the first might, and that large scale restructuring of Greece’s economy will have ripple effects throughout the euro-zone, and that a larger scale European restructuring might be on the horizon.